NDIC Quarterly Vol 39 No 3&4 2024 – Review of Macroeconomic Developments in the Third Quarter of 2024

Review of Macroeconomic Developments in the Third Quarter, 2024

1.0 Macroeconomic Conditions
1.1 Global Economic Conditions

The global economy remained stable in the third quarter of 2024, although overall performance was subdued due to notable downside risks that offset positive developments. While trade activity firmed up and inflation slowed down, an increase in cross-border trade restrictions and geopolitical conflict, as well as overly long streaks of contractionary monetary policies and growth slowdowns in China, continued to weigh heavily on global economic growth.

According to the IMF in its October 2024 WEO Update, the projected 2024 annual global economic growth rate stayed at 3.2 per cent in the third quarter, the same as in the second quarter of 2024. Though the projection was unchanged from the April and July 2024 forecasts, it represented a decrease of 0.1 percentage point from the annual growth rate for 2023.

The annual growth rate for the third quarter of 2024 was sustained by forecasted growth gains in Advanced Economies (AE) and Latin America and the Caribbean (LAC), as growth in most other economic blocks was disappointing. Projected annual growth in Emerging Market and Developing Economies (EMDEs), Emerging and Developing Asia (EDA) and Sub-Saharan Africa (SSA) in the third quarter was all in decline, relative to the second quarter of the year.

As illustrated in Figure 1.1, the IMF's 2024 growth estimate for AEs was 1.8 per cent in the third quarter of 2024, marking an increase of 0.1 percentage point compared to the July 2024 projections and 1.7 per cent growth recorded for 2023. Similarly, Latin America and the Caribbean's (LAC) growth rate improved by 0.2 percentage points in the third quarter, achieving an annual growth of 2.1 per cent, compared with 1.9 per cent annual growth recorded in the second quarter. However, annual growth in EMDEs, SSA and EDA declined to 4.2 per cent, 3.6 per cent and 5.3 per cent in the third quarter 2024 from 4.3 per cent, 3.6 per cent and 5.4 per cent in second quarter 2024, respectively.

The growth in the AEs between the second and third quarters of 2024 stemmed from the stronger performance of the United States, given outturns in consumption and non-residential investment arising from increases in real wages (especially among lower-income households) and wealth effects. As reported in the IMF's October 2024 WEO Update, growth gains in Spain, UK, and France increased by 0.5, 0.4, and 0.2 percentage points between the second and third quarters, respectively. However, these growth gains were attenuated by 0.4 per cent growth loss in Japan from projected annual 0.7 per cent in the second quarter to 0.3 per cent in the third quarter of 2024.

Figure 1.1: Global and Regional Annual Growth Rates

AE= Advanced Economies; EMDEs= Emerging Market and Developing Economies; LAC=Latin America and the Caribbean; SSA= Sub-Saharan Africa; EDA=Emerging and Developing Asia Source: IMF WEO (July 2024¹ & October 2024² Edition)

Figure 1.2: Annual Growth Rates of Selected Countries

Source: IMF WEO (July 2024¹ & Oct 2024² Edition)

Growth in EMDEs remained at 4.2 per cent, unchanged from the second quarter of 2024. The growth was largely driven by the economic performance of Brazil, Russia and South Africa, though weakened by a general decline in growth across other EMDE countries, as depicted in Figure 1.2. Russia and South Africa had annual economic growth rates rise of 0.4 and 0.2 percentage points, respectively, reaching 3.6 per cent and 1.1 per cent in the third quarter of 2024.

¹ https://www.imf.org/-/media/Files/Publications/WEO/2024/Update/July/English/text.ashx ² https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://www.imf.org/-/media/Files/Publications/WEO/2024/October/English/text.ashx&ved=2ahUKEwjN5PKIwbOJAxW5WUEAHZhMFS MQFnoECBMQAQ&usg=AOvVaw2qVBOrXrHeAWvcrb1xdAiC

The weak economic performance in Africa's economies apparently fed into the slow growth of the SSA region. Nigeria recorded a successive growth decline of 0.2 percentage points in the second quarter to 2.9 per cent from 3.1 per cent and 3.3 per cent annual growth in the first quarter of 2024, equal to the 2.9 per cent recorded in 2023. South Africa's annual economic growth increased to 1.1 per cent in the third quarter from 0.9 per cent in the second quarter of 2024, higher than the 0.7 per cent recorded in 2023.

1.2 Global Financial Conditions
1.2.1 Global Inflation

The IMF, in its October 2024 report, projected global headline inflation to decrease further, from an average of 6.7 per cent in 2023 to 5.8 per cent in 2024. Disinflation was expected to be faster in advanced economies, with a decline of 2.0 percentage points by the end of 2024. The projection reflected an anticipated variation across emerging market economies and developing economies, in which inflation was projected to decline from 8.1 per cent in 2023 to 7.9 per cent in 2024, partly due to early monetary tightening and price controls in many countries in the region. In contrast, inflation forecasts for emerging and developing Europe, the Middle East and North Africa, and Sub-Saharan Africa remain in double-digit territory on account of large outliers amid pass-through of past currency depreciation and administrative price adjustment (Egypt) and underperformance in agriculture (Ethiopia). For most countries in Latin America and the Caribbean, inflation rates have dropped significantly from their peaks and continue to be on a downward trend.

With output gaps gradually closing and inflation on a downward trajectory and approaching targets in many countries, priority has moved to ensuring a smooth landing. As before, and compared to their positions at the end of the second quarter, central banks in major advanced economies have become more cautious regarding the pace of policy easing due to persistently increased certainty surrounding the inflation forecast. The World Bank in its October 2024 report projected global inflation to fall from an annual average of 6.7 per cent in 2023 to 5.8 per cent in 2024 and 4.3 per cent in 2025.

In the third quarter of 2024, market expectations regarding the trajectory of policy rate cuts remained stable, reflecting a broader reassessment of future monetary policy paths and their implications for the global financial conditions. Consequently, longer-term yields have generally adjusted in response to these expectations.

Global financial markets experienced significant turbulences ranging from weaker-than-expected jobs data, which raised concerns about a potential recession in the United States; Bank of Japan's decision to hike interest rates, resulting in a rapid unwinding of Japanese-yen-funded carry trades amplified equity market correction; disconnect between economic uncertainty and market volatility; and overstretched equity valuations, particularly in the technology sector.

However, with output gaps expected to close, and assuming no disruptions to labor supply in advanced economies, wage growth is expected to moderate. Whether recent increases in real wage will translate into higher core inflation will depend on (1) the impact of the increases on unit labor costs, which itself depends on labor productivity, and (2) the willingness of firms to absorb increased unit labor costs and the implication for their profit margins. These two factors seem to be working differently in the two largest advanced economies, but should still allow disinflation to continue. In the United States, wage growth has reflected productivity gains lately, keeping unit

labor costs contained. In the euro area, recent wage increases have exceeded productivity, raising unit labor costs. A notable divergence is observed in the US, where medium- to long-term yields have remained unchanged.

1.2.2 International Trade

The IMF, in its October 2024 WEO, projected the world trade volume to rise by 3.1 per cent in 2024, from 0.8 per cent in 2023. The projection remained the same as the July 2024 WEO and short of the 3.0 per cent growth expected in the April 2024 WEO. The growth projection was mainly triggered by moderation in inflationary pressure, limited impact of geopolitical tension, increasingly more trade occurring within geopolitical blocs rather than between them, and decline in goods trade growth by approximately 2.5 percentage points more between geopolitically distant blocs than within blocs.

1.2.3 Commodity and Crude Oil Prices

According to the IMF October 2024 WEO, oil prices were projected to increase by the annual rate of 0.9 per cent in the third quarter of 2024, compared with a 0.8 per cent increase in the second quarter of 2024. Conversely, the prices of non-oil commodities were expected to decrease by 2.1 percentage points in the third quarter of 2024, to 2.9 per cent, from a 5.0 per cent anticipated growth rate in the second quarter of 2024. The recent increase in oil prices was largely attributed to deep production cuts by OPEC+ and fear of broader regional escalation of tensions in the Middle East.

The OPEC monthly reports show that the crude spot prices of OPEC Reference Basket (ORB), Arab Light and Bonny Light increased in July 2024, but declined in August and September 2024. As shown in Figure 1.3, the ORB prices increased from $83.22 per barrel (pb) in June 2024 to $84.43 pb in July 2024, before the decline in August to $78.41 pb and $73.59 pb in September 2024.

Similarly, Arab Light prices increased from $82.14 pb in January 2024 to peak at $90.64 pb in April 2024, before declining to $85.60 pb, $85.31 pb in May and June 2024, respectively. It increased to $86.19 pb in July 2024, but continued the decline trend to $79.71 pb and $75.16 pb in August and September, respectively. Bonny Light price also followed the same pattern, as it increased from $80.84 pb in January 2024 to $93.17 pb in April 2024, and dipped to $83.30 pb in June 2024, had an uptick in July to $85.07 pb, only to continue the declining trend to $81.99 and pb $77.08 pb in August and September, respectively. The decline was attributed to market sentiment arising from sell pressure from non-commercial participants in the oil futures market. Spot prices also came under pressure from lower refining margins in all markets, as well as the refinery maintenance season.

Figure 1.3: Crude Oil Spot Price

Source: OPEC Monthly Reports²³,⁴

The movement in the futures prices, as depicted in Figure 1.4, shares similar patterns with that of crude oil. Texas Intermediate crude oil on the New York Mercantile Exchange (NYMEX WTI) and the Intercontinental Exchange (ICE Brent) rose from $73.86 per contract (pc) and $79.15 pc in January 2024 to $84.39 pc and $89.00 pc in April 2024, respectively, but declined to $78.62 pc in May. It increased slightly in June to $78.70 pc, and declined steeply to $69.37 pc in September, while ICE Brent increased to $83.88 pc in July but declined to $72.87 pc in September 2024.

Figure 1.4: Crude Oil Futures ($/Contract)

Source: OPEC Monthly Reports⁴

1.3 Global Economic Outlook

³https://www.opec.org/opec_web/static_files_project/media/downloads/publications/OPEC_MOMR_September_2024.pdf ⁴https://momr.opec.org/pdf-download/res/pdf_delivery_momr.php?secToken2=1

The projected decline in global growth was anchored on the forecasted decline in the growth contributions of Germany, Russia and Italy, respectively at 0.5 per cent, 1.3 per cent and 0.8 per cent in 2025. Germany's contribution decreased by 0.5 percentage points from the earlier projection of the IMF's July 2024. Despite the lukewarm outlook of the AEs and the Euro Area, the macroeconomic outlook for 2025 economic growth projections of United States increased to 2.2 per cent, while that of Spain, UK and Canada were stable at projections of 2.1 per cent, 1.5 per cent and 2.4 per cent, respectively as it was in the July 2024 forecast and as shown in Figure 1.6.

Figure 1.6: Annual Growth Forecasts for Selected Countries in 2025

Source: IMF WEO (July 2024¹ & October 2024² Edition)

Similarly, the 2025 growth rate forecasts for India and China remained stable at 6.5 per cent and 4.5 per cent, respectively, the same as the earlier projections of July 2024. In contrast, the 2025 growth rate forecasts for Nigeria and South Africa are expected to increase above the earlier projection of the IMF's WEO July 2024 by 0.2 and 0.3 percentage points, respectively.

1.4 Domestic Economic Conditions
1.4.1 Real GDP

The Nigerian economy grew by 3.46 per cent, quarter-on-quarter (q-o-q), in the third quarter of 2024, to N20.12 trillion (in constant prices), from N19.44 trillion in the third quarter of 2023. The growth rate is higher than the 2.54 per cent recorded in the third quarter of 2023 and 3.19 per cent in the second quarter of 2024.

The performance in the third quarter of 2024 came from improvement in the oil sector which not only grew by 5.17 per cent in the quarter under review (compared with negative 0.85 per cent growth in the third quarter of 2023), it also increased in its contribution of 5.57 per cent to the GDP in the third quarter of 2024, from 5.48 per cent in the third quarter of 2023. However, the contribution of non-oil sector dropped slightly to 94.43 per cent in the third quarter of 2024 from 94.52 per cent in the third quarter of 2023.

Table 1.1: GDP Growth Rates and Related Indicators in Nigeria

Real GDP and Sectoral Components

Q1	Q2	Q3	Q4	Annual	Q1	Q2	Q3
Real Gross Domestic Product, Real GDP (N' Trillion)
Real GDP (constant price)	17.75	17.72	19.44	21.77	76.68	18.28	18.29	20.12
Growth Rates (Percentage)
Real GDP (Economic growth)	2.31	2.51	2.54	3.46	2.74	2.98	3.19	3.46
Non-oil Sector	2.77	3.58	2.75	3.07	3.04	2.80	2.80	3.37
Oil Sector	(4.21)	(13.43)	(0.85)	12.11	(2.22)	5.70	10.15	5.17
Agricultural sector	(0.90)	1.50	1.30	2.10	1.13	0.18	1.41	1.14
Industrial Sector	0.31	(1.94)	0.46	3.86	0.72	2.19	3.53	2.18
Service Sector	4.35	4.42	3.99	3.98	4.18	4.32	3.79	5.19
Sectoral Contribution (Percentage)
Non-oil Sector	93.79	94.66	94.52	95.30	94.60	93.62	94.30	94.43
Oil Sector	6.21	5.34	5.48	4.70	5.40	6.38	5.70	5.57
Total (oil and Non-oil)	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00
Agriculture	21.66	23.01	29.31	26.11	25.18	21.07	22.61	28.65
Industry	21.05	18.56	18.00	17.34	18.65	20.89	18.62	17.77
Service	57.29	58.42	52.70	56.55	56.18	58.04	58.76	53.58
Total (Agric, Industry, and Service)	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00

Source: NBS (Q3, 2024) Nigerian Gross Domestic Product Report Q3, 2024²⁴

The service sector grew by 5.19 per cent and contributed 53.58 per cent to real GDP, thus having the largest impact on economic growth in the third quarter of 2024. Meanwhile, the agricultural and industrial sectors achieved growth rates of 1.14 per cent and 2.18 per cent, respectively, contributing 28.65 per cent and 17.77 per cent to real GDP in the same period.

1.4.2 Consumer Price and Food Indices (Inflation)

Inflation pressure in Nigeria softened in the third quarter of 2024 as all indicators of inflation decreased slightly in the third quarter of 2024. As depicted in Figure 1.7, Headline inflation decreased from 34.19 per cent at the end of June 2024, to 33.4 per cent in July, further declined to 32.15 per cent in August and 32.7 per cent in September 2024.

Food inflation also declined, moving from 40.87 per cent in June 2024 to 39.53 per cent in July and down to 37.52 per cent in August, before a slight increase to 37.77 per cent in September. Core inflation followed a similar pattern to food inflation, increasing from 25.53 per cent in June 2024 to 26.28 per cent in July, with slight increases to 26.36 per cent in August and 26.49 per cent in September 2024.

Figure 1.7: Inflation in Nigeria

⁵ Available and accessed on 26/11/2024 from: https://www.nigerianstat.gov.ng/elibrary/read/1241593

Source: CBN Statistical Database⁶

The overall decrease in inflation rates can be primarily attributed to an improved food supply, which has temporarily eased food prices due to increased availability from recent harvests, alongside monetary policy adjustments.

1.4.3 Exchange Rate Movement

As illustrated in Figure 1.8, the Naira depreciated against Nigeria's major trading currencies during the third quarter of 2024. The exchange rate of the Naira to the US dollar depreciated from N1,470.19/$1 at the end of June 2024 to N1,611.21/$1 in July 2024.

However, it appreciated slightly to N1,596.14/$1 in August and later depreciated to N1,601.03/$1 at the end of September 2024. The Naira also depreciated against both the Pound Sterling and the Euro consistently, increasing to N2,142.98/£1 and N1,789.15/€1 by the end of September 2024, compared to N1,858.47/£1 and N1,573.25/€1 at the end of June 2024.

Figure 1.8: Naira-USD Exchange Rate

⁶ https://www.cbn.gov.ng/rates/inflrates.asp

Figure 1.9: External Reserves/Crude Oil Prices

Source: CBN Statistical Database⁷

1.4.4 External Reserves

The External Reserves exhibited a mixed performance in the second quarter of the year, as shown in Figure 1.9. The Reserves increased from US$34.19 billion at the end of the second quarter of 2024 to US$36.79 billion in July 2024. However, in August 2024 there was a slight decrease to US$36.31. A recovery occurred in September 2024, with reserves increasing to US$38.35 billion.

During the same period, the price of crude oil fell by 17.19 per cent to $73.95 pb at the end of the third quarter of 2024 from US$89.31 pb at the end of the second quarter of 2024.

Reserves Crude oil prices (Month End)

Source: CBN Statistical Database ⁸,⁹

1.5 Nigeria Public Debt Stock

⁷ https://www.cbn.gov.ng/rates/ExchRateByCurrency.asp ⁸ https://www.cbn.gov.ng/IntOps/Reserve.asp?MoveDate=7/22/2024%203:50:58%20PM ⁹ https://www.cbn.gov.ng/rates/DailyCrude.asp

Nigeria's total public debt rose from N134.29 trillion at the end of the second quarter of 2024 to N142.31 trillion at the end of the third quarter of 2024, representing a 5.97 per cent increase over the period. The debt comprises domestic debts and external debts, which stood at N73.43 trillion and N68.88 trillion, accounting for 51.60 per cent and 48.40 per cent, respectively, of the total public debt at the end of the third quarter of 2024.

Table 1.2 Nigeria Public Debt

Debts

| | 2023 | | | | 2024 | | |
|---|---|---|---|---|---|---|---|---|
| | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
| Public Debts (N' Trillion) | | | | | | | |
| Total External Debt | 19.64 | 33.25 | 31.98 | 38.22 | 56.02 | 63.07 | 68.88 |
| Total Domestic Debts | 30.21 | 54.13 | 55.93 | 59.12 | 65.65 | 71.22 | 73.43 |
| Total Public Debt | 49.85 | 87.38 | 87.91 | 97.34 | 121.67 | 134.29 | 142.31 |
| Public Debt Growth Rate (%) | 7.78 | 75.29 | 0.61 | 10.73 | 24.99 | 10.38 | 5.97 |
| Public Debts ($' Billion) | | | | | | | |
| Total External Debt | 47.36 | 80.17 | 77.11 | 92.16 | 42.11 | 42.90 | 43.02 |
| Total Domestic Debts | 72.84 | 130.52 | 134.86 | 142.55 | 49.35 | 48.45 | 45.87 |
| Total Public Debt | 120.2 | 210.7 | 211.97 | 234.71 | 91.46 | 91.35 | 88.89 |
| Public Debts (External/Internal as Proportion of Total (%) | | | | | | | |
| Total External Debt | 39.40 | 38.05 | 36.38 | 39.26 | 46.05 | 46.96 | 48.40 |
| Total Domestic Debts | 60.60 | 61.95 | 63.62 | 60.74 | 53.95 | 53.04 | 51.60 |
| Total Public Debt | 100 | 100 | 100 | 100 | 100 | 100 | 100 |
| Debt Service | | | | | | | |
| Actual External Debt Services ($ 'million) | 801.36 | 368.26 | 1390.71 | 943.17 | 1,120.01 | 1,120.39 | 1,338.26 |
| Actual External Debt Services (N' billion) | 368.91 | 283.7 | 1069.12 | 848.28 | 1,489.94 | 1,647.19 | 2,142.61 |
| Actual Domestic Debt Service | 874.13 | 565.88 | 1,792.47 | 2,000.6 | 989.24 | 2,852.75 | 1,433.32 |
| Total Debt Services paid ('billion) | 1,243.04 | 849.58 | 2,861.59 | 2,848.88 | 2,479.18 | 4,499.94 | 3,575.93 |
| US$/Naira Rate | 460.35 | 770.38 | 768.76 | 899.39 | 1330.3 | 1,470.19 | 1601.03 |

Source: Debt Management Office ²⁵

As shown in Table 1.2, the total of N3,575.93 billion was spent on debt servicing in the third quarter of 2024, comprising N1,433.32 billion and N2,142.61 billion on domestic and external debt servicing, respectively.

1.6 Financial Sector Developments

¹⁰ https://www.dmo.gov.ng/debt-profile/external-debts/debt-service/5081-nigeria-s-actual-external-debt-service-payments-in-3rd-quarter-2024 ¹¹ https://www.cbn.gov.ng/rates/mnymktind.asp

1.6.1 Money Market Development

Figure 1.10 shows the deposit and lending rates in Nigeria. The savings deposit slightly rose from 6.67 per cent in June to 6.74, 6.75 and 6.79 per cent in July, August and September 2024, respectively. Interest rates on time deposits also increased from 13.08 per cent in June to 16.93 per cent in July, then slightly decreased to 16.24 per cent and 13.78 per cent in August and September 2024, respectively.

Figure 1.10: Deposit and Lending rates in Nigeria (Q2 - Q3, 2024)

Source: Central Bank of Nigeria ¹¹

Prime lending rate increased slightly from 15.58 per cent in June to 15.89 per cent in July and further rose to 17.01 per cent in August before declining to 16.75 per cent in September 2024. Max lending rate decreased from 29.11 per cent in June to 28.89 per cent in July and later increased to 29.93 per cent and 30.21 per cent in August and September 2024, respectively.

Figure 1.11 compares the money market rates from the second quarter to the third quarter of 2024. The interbank call rate which had been at 25.13 per cent in June slightly increased to 25.77 per cent in July and further rose to 28.44 per cent in August before decreasing to 27.92 per cent in September 2024. The Monetary Policy Rate (MPR), which stood at 26.25 per cent in June was raised to 26.75 per cent and 26.77 per cent in July and August respectively, and further to 27.25 per cent in September 2024. Treasury bill rate slightly increased from 16.37 per cent in June to 16.99 per cent in July and further rose to 18.3 per cent in August before declining to 16.91 per cent in September 2024. The prescribed Cash Reserve Ratio (CRR) which had been at 45.00 per cent since March 2024, rose to and remained at 50 per cent throughout the third quarter of 2024. However, Liquidity Ratio has been unchanged at 30.00 per cent since January, 2024.

Figure 1.11: Money Market Rates (Q2 - Q3, 2024)

Source: Central Bank of Nigeria ²⁶

As depicted in Figure 1.12, Narrow Money (M1), which stood at N36.78 trillion in June, declined to N35.32 trillion and N34.95 trillion in July and August respectively, and later increased to 35.56 trillion in September 2024. Money Supply (M2), which was N101.34 trillion in June 2024, rose to N106.35 trillion, N107.18 trillion and N108.95 trillion in July, August and September 2024, respectively. Broad Money Supply (M3), which stood at N101.35 trillion in June 2024, increased to N106.35 increased to N106.36 trillion, N107.19 trillion and N108.95 trillion in July, August and September 2024, respectively.

Figure 1.12: Money Supply in Nigeria (Q2 - Q3, 2024)

Source: Central Bank of Nigeria ²⁷

1.7 Capital Market Development
1.7.1 All-Share Index

The Nigeria Exchange Limited All-Share Index (NGX ASI) exhibited notable fluctuations throughout the third quarter of 2024. As shown in Figure 1.13, the index decreased from

¹² https://www.cbn.gov.ng/rates/mnymktind.asp
²⁷ https://www.cbn.gov.ng/rates/mnycredit.asp

100,057.49 at the end of the second quarter, June 30, 2024, to 97,774.22 in July and further declined to 96,579.54 in August before rising to 98,558.79 in September 2024.

Figure 1.13: Movement in NGX All-Share Index (Q2 - Q3, 2024)

Source: NGX Market Capitalisation Reports²⁸

1.7.2 Domestic and Foreign Portfolio Investments

As shown in Table 1.3, the total portfolio investment rose by 38.66 per cent from N354.55 billion in June 2024 to N491.61 billion in July 2024, but fell by 22.80 per cent in August 2024 to N379.52 billion, and later increased by 29.90 per cent to N493.01 billion in September 2024.

Table 1.3: Domestic & Foreign Portfolio Transactions in Equity Trading in (Q4, 2023 – Q3, 2024)

Year	Month	Total		Domestic		Foreign
		N' Billion	Growth (%)	N' Billion	Growth (%)	N' Billion	Growth (%)
	September	493.01	29.90	451.60	7.95	41.41	-27.95
	August	379.52	-22.80	322.05	-3.90	57.47	-0.09
	July	491.61	38.66	434.09	14.94	57.52	-30.02
2024	June	354.55	-0.23	272.36	18.13	82.19	-33.71
	May	355.38	2.64	231.1	2.53	124.28	2.86
	April	346.23	-35.71	225.4	-49.27	120.83	28.19
	March	538.54	50.48	444.28	1.09	94.26	-4.84
	February	357.88	-45.07	292.07	59.83	65.81	23.91
	January	651.52	89.45	598.41	-38.27	53.11	10.95
2023	December	343.9	14.38	296.03	29.1	47.87	-32.93

Sources: The Nigerian Exchange's Domestic & Foreign Portfolio Investment Reports²⁹

²⁸ https://ngxgroup.com/exchange/data/indices/ ²⁹ https://doclib.ngxgroup.com/market_data-site/other-market-information-site/FPI%20Report/NGX%20Domestic%20and%20Foreign%20Portfolio%20Investment%20Report- %20January%202024%2021%2002%202024.pdf

The percentage contribution of portfolio transactions by domestic investors increased from 76.82% at the end of the second quarter of 2024 to 91.60% at the end of the third quarter of 2024. The percentage contribution of portfolio transactions by foreign investors decreased from 23.18% to 8.40% over the same period.

1.8 CBN Monetary Policy and Circulars
1.8.1 Monetary Policy

In the third quarter of 2024, the CBN's Monetary Policy Committee (MPC) convened two meetings, on July 22-23 and September 23-24.

In the July meeting, the Committee:
i. expressed concern over elevated inflation, particularly in food and energy sectors, fueled by persistent insecurity in agricultural zones and high transport costs;
ii. supported the Federal Government's 150-day duty-free import window for key food commodities, aimed at alleviating food inflation, as a short-term measure to enhance food supply without significantly increasing liquidity;
iii. underscored the impact of middlemen exacerbating food inflation by hoarding and smuggling goods, and it advocated for measures to curtail these activities to alleviate domestic inflation pressures; and
iv. noted improvements in foreign exchange market efficiency and banking sector resilience, with foreign reserves at $37.05 billion by mid-July, supporting a more stable exchange rate environment.

At the September meeting, the Committee:
i. noted a marginal moderation in headline inflation for July and August due to a slight decline in food inflation. However, core inflation remained high, mainly due to increased energy prices;
ii. raised concerns over continued monetary growth and the impact of fiscal deficits on inflationary pressures, while reiterating the government's commitment to limiting fiscal reliance on central bank funding; and
iii. lauded initiatives such as the Dangote refinery's support in reducing transportation costs, the duty-free food import window, and federal efforts to enhance security in farming communities.

1.8.2 MPC Recommendations

The Committee:
i. emphasized the importance of a multi-faceted approach, advocating for strengthened collaboration with fiscal authorities to implement structural measures targeting inflation at its roots;
ii. advocated for measures to encourage a positive real interest rate, vital for attracting investment and improving exchange rate stability;
iii. recommended continued supervisory oversight to ensure the resilience and soundness of financial institutions; and

iv. recommended heightened supervisory vigilance over FAAC releases and government expenditures, aiming to contain inflation and bolster confidence in the financial markets.

1.8.3 MPC Decisions

The MPC, in its statutory meetings held in the Second quarter of 2024, voted to:
i. Raise the Monetary Policy Rate (MPR) by 50 basis points to 26.75 per cent in July and by another 50 basis points to 27.25 per cent in September;
ii. Adjust the asymmetric corridor around the MPR to +500/-100 basis points in July and retained in September;
iii. Retain the Cash Reserve Ratio (CRR) of Deposit Money Banks (DMBs) at 45.00 per cent and Merchant Banks at 14.00 per cent in July; and Raise the CRR of DMBs by 500 basis points to 50.00 per cent and Merchant Banks by 200 basis points to 16 per cent in September; and
iv. Retain the Liquidity Ratio at 30.00 per cent.

1.8.4 CBN Third Quarter Circulars

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/002/011 Guidelines on Management of Dormant Accounts, Unclaimed Balances and Other Financial Assets in Banks and Other Financial Institutions in Nigeria

The circular, issued on July 19, 2024, to all banks and other financial institutions ensure that unclaimed balances, after 10 years of dormancy, are securely held in trust by the CBN to prevent unauthorized usage and fraud. Financial institutions are required to monitor dormant accounts, notify customers, and transfer unclaimed balances to a CBN-managed Unclaimed Balances Trust Fund (UBTF). The guidelines also set procedures for customers to reclaim funds and mandate that both the CBN and financial institutions publish lists of dormant accounts regularly. The NDIC will assume these responsibilities in cases involving institutions in liquidation.

ii. FMD/PUB/CIR/001/017 Operationalization of the Standing Deposit Facility (SDF) Asymmetric Corridor

This circular, dated August 26, 2024, was issued in response to the 296th Monetary Policy Committee meeting, which adjusted the asymmetric corridor to +500/-100bps from +100/-300bps. As a result, the committee adjusted the standing lending facility to 31.75% and the Standing Deposit Facility (SDF) to 25.75%. In view of that, the SDF rate was set at 25.75% for commercial and merchant banks' deposits up to N3 billion, with the rate of 19% applicable for excess deposits above the initial N3 billion. Additionally, the same 25.75% rate will be applied to deposits at payment service banks up to N1.5 billion, with 19% for excess deposits above the initial N1.5 billion.