In its second year of economic projections, the NBS is also evolving in its approach to forecasting by employing an econometric model to augment  results from the traditional methods of surveys and its system of administrative statistics. A Bayesian Vector Autoregressive (BVAR) model is employed to provide a baseline forecast for Gross Domestic Product (GDP), inflation and the value of total trade. Adjustments are made to incorporate the effect of the nationwide strike that occurred in the early part of January 2012, as well as the shock to the economy due to the partial repeal of the subsidy on Premium Motor Spirit (PMS).

In 2012, the Nigerian economy measured by real GDP is projected to grow at 6.50 percent, a decline in the annual growth rate compared to 2011. However, in 2013, the economy is projected to grow at a faster pace as the effects due to the partial repeal of the PMS subsidy are expected to dissipate. The economy is expected to grow at a respectable rate of 7.43 percent in 2014 and 7.25 percent in 2015.

In 2012, inflation is projected to rise to 13.57 percent due, to some extent, to the higher price levels in the economy following the partial removal of the PMS subsidy. The BVAR model also indicates inflation rates of 12.21 percent in 2013, 12.04 percent in 2014 and 11.91 percent in 2015. It is important to note that these projected rates also depend on the responses of the Central Bank of Nigeria (CBN) through monetary policy which has set its sights on single digit inflation. In fact, the moderation in price levels in 2011 could be partially attributed to the decisions by the CBN during the period.

The Value of Total Trade for the country is expected to decline in by 11.03 percent in 2012. This is expected to be partly due to the import ban on certain food products that took effect in 2011. The decline could also be due to a decline in crude oil exports possibly due to supply disruptions that occurred during 2011. Further out into the near term, the value of total trade is expected to rebound in 2013 to 11.25 percent, followed by 20.6 percent in 2014 and 16.44 percent in 2015.

In conclusion, while shocks in the early part of 2012 may have marginally slowed economic growth, the economy is expected to rebound in 2013 and grow at respectable trends in 2014 and 2015. The projected growth rates in this report may be further accelerated due to economic reforms expected to kick-in in the near future. As the current Administration is looking to reform key sectors such as agriculture and power, coupled with increased public (capital) expenditure, these are likely to put the economy on a higher growth path.

Here is the chart of their GDP projections:

You can read the full outlook below.

Importantly, the calculation has been rebased to 2009. The summary of the report is below. You can also download the report below.

ALL ITEMS INDEX
The Composite Consumer Price Index which measures inflation rose to 12.9 percent year-on-year in April 2012. The higher year-on-year change could be partly attributable to base effects as the index was relatively more stable in April of 2011. This is because lower price levels in April 2011 will reflect higher year-on-year percentage changes in April of 2012. On a monthly basis, the composite CPI was higher by 0.13 percent when compared with March 2012, as prices moderated in April. The increase in the headline index, composed of the core and food indices, was partially due to the higher price levels in the economy. However, this was moderated by lack of constant liquidity in the economy.

The urban inflation rate was recorded at 13.4 percent year-on-year while the rural figure was reported to be 12.4 percent for April 2012. The urban All Items index increased by 0.3 percent on month-on-month, while the corresponding rural index increased marginally by 0.01 percent, when compared with the preceding month.

The percentage change in the average composite CPI for the twelve-month period ending April 2012 over the average of the CPI for the previous twelve-month period was 11.1 percent, up slightly from the 10.9 percent recorded in the preceding month. The corresponding 12-month year-on-year average percentage change for urban and rural indices were 10.3 percent and 11.7 percent respectively.

FOOD INDEX
In April, the level of the Composite Food Index was higher than the corresponding level a year ago by 11.2 percent. Compared with March 2012, average monthly food prices rose in April 2012 by 0.2 percent. The rise in the food index while moderate was mainly due to marginal increases of most food classes, for instance, bread and cereals, meat, and fish, as well as the increasing cost of other food products especially yams and other tubers as they have become relatively scarce due to the drawdown from the end of year harvest. The average annual rate of rise of the index remained at 10.3 percent (year-on-year) for the twelve-month period ending April 2012.

ALL ITEMS LESS FARM PRODUCE
The “All items less Farm Produce” index which excludes the prices of volatile agricultural products rose by 14.7 percent year-on-year, while the average 12 month annual rate of rise of the index was 12.2 percent for the twelve-month period ending April 2012. The rise in the “Core” index could be attributable to higher price levels in major divisions that compose the index. On a month-on-month basis, the core index increased marginally by 0.1 percent in April 2012.

GT Bank PLC:
GT Bank December 2011 Financial Results (IFRS) (25)

Conference Call Recording.

December 2011 Financial Statements (GAAP) (15).

Stanbic IBTC:
Company Results - Stanbic IBTC - FY 2011 - Investor Presentation (14).

Company Results - Stanbic IBTC - FY 2011 - Press Release (23).

Company Results - Stanbic IBTC - FY 2011 Abridged Results (16).

UBA:
Company Results - UBA - FY 2011 - Consolidated Results (29)

Zenith Bank:
Company Results - Zenith Bank - FY 2011 - Group Results Presentation (19).

Company Results - Zenith Bank - FY 2011 - Press Release (11).

Company Result - First Bank of Nigeria - FY2011- Consoldiated Results (29).

Company Result - Skye Bank - Q3 2011 Result - Press Release (11).

Company Results - Access Bank - FY 2011 - Investor Presentation (11).

Company Results - Access Bank FY 2011 Audited Financial Statement (31).

Company Results - Diamond Bank - FY 2011 - Investor Presentation (9).

Company Results - Diamond Bank Plc - FY 2011 - Press Release (18).

Company Results - Diamond Bank Plc - FY 2011 (14).

Company Results - FCMB - FY2011 - Press Release (10).

Company Results - FCMB - FY2011 Investors and Analysts Presentation (10).

Company Results - FCMB - FY2011 (22).

Company Results - First Bank of Nigeria - FY 2011 - Annual Report (18).

Company Results - First Bank of Nigeria - FY 2011 Results (16).

And here is the report:

The Composite Consumer Price Index which measures inflation rose sharply to 12.6 percent  year-on-year  in  January  2012.  This  figure  is  2.2 percentage  points  higher than  10.3  percent  recorded  in  the  previous  month.  The  monthly  composite  CPI rose  significantly  by  3.4 percent  when  compared  with  December  2011.    The increase in the headline index, composed of the “Core” and Food indices, was due to  the partial  removal  of  the  subsidy  on  the  Premium  Motor  Spirit  (petrol)  that pushed  up  prices  of  many  food  and non-food  items  as  a result  of  the increase in transportation costs.

The urban inflation rate recorded a sharp increase when compared with the rural figure in January 2012. The year-on-year increase for Urban and Rural dwellers was 16.4 and 9.7 percent respectively.  The urban All Items index rose by 5.3 percent on month-on-month,  while  the  corresponding rural  index  increase  by  1.8  percent when compared with their preceding month. The inflationary impact of the partial subsidy removal was therefore largely concentrated in the urban areas relative to the  rural  areas  where  most  Nigerians  live.  The  biggest  contributors  to  the consumer  inflation  were  the  high  prices  of  some  food  items,  liquid  fuel  and transport fares, and other miscellaneous goods and services which need liquid fuel and or transport fares for providing their services.

The percentage change in the average composite CPI for the twelve-month period ending  January  2012  over  the  average  of  the  CPI  for  the previous  twelve-month period  was  10.9.  This  was  slightly  higher  than  the  10.8  percent  recorded  for  the preceding month.   The corresponding 12-month year-on-year average  percentage change for urban and rural indices were 9.1 and 12.3 respectively.

While the impact of the subsidy removal on the CPI was visible and significant, this was tempered by several demand side factors which kept a downward pressure on price increases and prevented them from rising much higher than would have been expected.  Prices are dependent largely on demand and supply forces. If prices rise above buyers ability to pay (since disposable income remains constant), there will be  excess  supply  at those  high  prices  and  for  perishable  products  in  particular, prices will gradually come back down to levels where people can afford them. Even for non-perishable products, there is an amount of time after which a seller who depends  on  daily  income  will  keep  prices  high  in  the absence  of  demand,  after which  he  will  be  forced  to  reduce  his  prices  to  get  some  sales  to  carry  out  his daily/weekly family activities even if reducing those prices will be at a loss to him.

The CPI and consequently, the inflation rate though significant was moderated by several demand factors in January 2012.  Firstly, due to proactive monetary policy from  the  Central  Bank  of  Nigeria  (CBN)  in  the  second  half  2011,  Inflation  was expected to drop to between 8% and 9% in January 2012 (assuming there was no partial removal of subsidy). This earlier tightening by the CBN therefore helped to curtail the overall impact on inflation in January 2011 following the partial removal of subsidy. At the same time, the slow release of funds by the government’s FAAC reduced effective  demand  by  reducing  available  resources  for  backing  increased consumption  and  expenditure  during  the  month  of  January. This coupled  with consumer’s  anticipated  recovery  from  December  expenses  (which  did  not  occur again,  due  to  reduced  funds  in circulation) further  depressed  demand  and  thus limited  price  increases  and  gradually  revised  some  downwards.

Furthermore, during  the  strike period in  January,  2012,  consumers  had  a  temporary  lack  of access to funds as banks were closed. Finally, consumers with higher consumption profiles  had  stockpiled  goods  before  and  during  the  strike  period  and  thus  their demand  even  after  the  strike  period  was dampened as  they  drew  down  their pantries rather than demand new stocks. This reduced demand in the market such
that the high prices that immediately followed the partial removal of subsidy was dampened  and  started  coming  down  slightly  in  the  second half  of  January  2012 (though not to the pre partial subsidy removal levels). While we acknowledge that prices of certain food products were stillvery high in some parts on the country, it is  important  to  note  that  they  were  lower  in  others.  Food  price  increases  in  the Northern part of the country, where most food is produced were not as high as in the South where food is subject to significant transportationcosts.

Accordingly, the transport  costs  effect  of  the    partial  subsidy  removal  on  food  prices  will  be  a  lot less  in  the  North  were food is  largely  produced  since  it  is  closer  to  the  source  of production and hence has fewer miles to travel than in the Southern market where it has  to  be  transported.  At  the  same  time  the rise in the  price of imported food will be lower in the Southern States which are closer to the major ports than in the North  where  imported  food  items  have  to  be  transported  and  hence  affected  by the increase in fuel prices.

Such dynamics also helped to limit the overall impact on the rise in CPI and inflation which as an average across the country. The sharp rise in urban  inflation  by  16.4  percent  as  aforementioned,  relative  to  the  somewhat muted  rise  of  9.7  percent  in  rural  inflation demonstrates  this  geographical dimension and variation in price increases in the country.

FOOD INDEX
In  January  2010,  the  level  of  the  Composite  Food  Index  was  higher  than  the corresponding level a year ago by 13.1 percent.  This was higher than 11.0 percent recorded  in  the  previous  month.  On  a  month-on-month  analysis  the  average monthly  food  prices  rose  in January 2012  by  0.9  percent  from  December  2011.
Again,  while  the  higher  food  prices  partially  reflected  transportation  costs,  other factors (stated above) limited further price increases.  The rise in the food inflation was mainly due to the increasing cost of yam, other tubers, cooking oil, meat, fruit, vegetables  and beverages.  The  average  annual  rate  of  rise of  the  index  was  10.5 percent (year-on-year) for the twelve-month period ending January 2012.

ALL ITEMS LESS FARM PRODUCE
The “All items less Farm Produce” index which excludes the prices of often volatile agricultural  products  rose  by  12.7  percent  year-on-year, while  the  average  12 month  annual  rate  of  rise  of  the  index  remained  stable  at  11.8  percent  for  the twelve-month period ending January 2012. On a month-on-month basis, the core index increased 3.5 percent in January 2012. The increase was mainly on transport fares,  liquid fuels  and  other  services  (  based  on  personal  services  such  as  hair dressers,  shoe  cleaners,  personal  assistants,  etc)    that require  transportation  to provide their services, or petrol, in the case of barbershops for example, to power generators.  Thus  such  services had  to  factor  in  price  increases  of  petrol  and  this affected the price of their services.

And you can also download the report here:

Nigeria Bureau of Statistics - CPI and Inflation Figures - January 2012 (60).

The focus will be on the Nigerian Stock Market and the Nigerian economy in general. Every and any information on the Nigerian economy will be posted as and when available.

Company Results - Zentih Bank Q3 2011 - Press Release (152).
Company Analysis - Afrinvest - Custodian and Allied Insurance Plc Q3 2011 Result (111).
Company Analysis - Afrinvest - Dangote Cement Plc Q3 2011 Result (102).
Company Analysis - Afrinvest - Dangote Sugar Refinery Plc Q3 2011 Result (210).
Company Analysis - Afrinvest - Diamond Bank Plc Q3 2011 Result (136).
Company Analysis - Afrinvest - FCMB Plc Q3 2011 Result (101).
Company Analysis - Afrinvest - Fidelity Bank - Q3 2011 Results (126).
Company Analysis - Afrinvest - First Bank - Q3 2011 (115).
Company Analysis - Afrinvest - Flour Mills of Nigeria - H1 2012 Result (128).
Company Analysis - Afrinvest - GT Assurance Plc - Q3 2011 Result (94).
Company Analysis - Afrinvest - GT Bank Plc - Q3 2011 Result (122).
Company Analysis - Afrinvest - Guinness (Nigeria) Plc Q1 2012 Result (94).
Company Analysis - Afrinvest - Nestle Nig PLC Q3 2011 (143).
Company Analysis - Afrinvest - Nigerian Banking Sector Q3 2011 Earnings Preview (153).
Company Analysis - Afrinvest - Nigerian Breweries Plc - Q3 2011 Result (143).
Company Analysis - Afrinvest - PZ Cussons (Nig.) Plc - Q1 2012 Result (105).
Company Analysis - Afrinvest - Skye Bank Plc Q3 2011 Result (131).
Company Analysis - Afrinvest - Stanbic IBTC Bank Plc Q3 2011 Result (100)
Company Analysis - Afrinvest - Total (Nigeria) Plc Q3 2011 Result (88)
Company Analysis - Afrinvest - UACN Plc Q3 2011 Result (109)
Company Analysis - Afrinvest - Unilever (Nigeria) Plc - Q3 2011 Result (168)
Company Analysis - Afrinvest - Zenith Bank Q3 2011 Results (108)

Below are the company earnings reports and press releases from some of the companies who have released their reports in the last 3 months:

Company Result - Access Bank - Q3 2011 Press Release.pdf (75).
Company Result - Access Bank - Q3 2011 Press Release.pdf (63).
Company Result - Ecobank - Q1 - Q3 2011 Results Presentation.pdf (90).
Company Result - FCMB - Q3 2011 Press Release.pdf (80).
Company Results - Access Bank - Q3 2011 Investor Presentation.pdf (69).
Company Results - Access Bank - Q3 2011 Results.pdf (74).
Company Results - Ecobank - Q3 2011 Results Press Release.pdf (71).
Company Results - FCMB - Q3 2011 (74).
Company Results - First Bank - Q3 2011 Results (63).
Company Results - First Bank - Q3 2011 (62).
Company Results - First Bank of Nigeria - 9 Month 2011 Results Presentation (86).
Company Results - First Bank of Nigeria - 9 Month Results (73).
Company Results - Oando PLC - Q3 2011 (92).
Company Results - Sterling Bank Q3 2011 Earnings Release (94).
Company Results - UAC of Nigeria Plc - Q3 2011 Press Release (111).
Company Results - UBA 9-Month Results (Q1-Q3 2011) Presentation (66).
Company Results - Zenith Bank Q3 2011 (71).
Company Results - Zentih Bank Q3 2011 - Press Release (152):

Equity Market Review & Outlook
+ The Nigerian equity market closed the week in bearish territory, despite a marginal rally on the last trading day. Consequently, the benchmark Index shed 176bps, while the average value of transactions for the week rose by 45.2%, relative to the previous week.
+ We expect equity market activities to remain flat this week as attractive rates in money and fixed income markets will lure investors from this market, despite anticipation that the release of results this week will boost the level of activities.

Money Market Review & Outlook
+ A hike in the MPR last week led to corresponding hikes in money market rates across board. A dearth of liquidity within the system saw rates skyrocket during the week, with slight moderation on Friday as proceeds from AMCON bond sales to the tune of N450.0bn were credited into the system.
+ We expect a decline in system liquidity this week on the back of an upcoming bond auction. Interbank rates should adjust upward by the end of the week, as liquidity within the system eases out.

Foreign Exchange Market Review & Outlook
+ Demand for the Dollar at the official market stood at US$1.3bn, 93.8% higher than the US$685.4m on demand at the single auction in the previous week. The CBN’s offer of US$400.0m at Monday’s auction was 45.7% short of the US$736.9m on demand, depreciating the Naira by 151k to close at N156.91/US$1.00.
+ We expect to see a slight depreciation in the Naira this week at the official market, with an appreciation at the interbank segment. We also expect the CBN to help ease supply gaps for the Greenback at the interbank, in a bid to limit the growing premium between markets.

Bond Market Review & Outlook
+ The 275bps hike in the MPR to 12.0% last week saw yields in the bond market adjust upwards by at least 300bps apiece on all securities at the end of the week. Although inflation for September came in at 10.3%, 100bps above the 9.3% reported for August 2011, these instruments will continue to generate real returns for investors based on current yields.
+ Despite an inflow of N450.0bn from the sale of AMCON bonds by certain banks late last week, liquidity is expected to tighten slightly this week on account of T-bills and bond auctions. This may lead to a further increase in yields, albeit marginally.

Afrinvest Weekly Update - 14th October 2011 (168).
NSE Weekly Report - FSDH - October 14th 2011 (156).
NSE Weekly Report - IBTC - October 14th 2011 (165).

Week Ended October 7th:
Afrinvest Weekly Update 7th October 2011 (121).
NSE Weekly Report - FSDH - October 7th 2011 (122)

Week Ended September 30th:
NSE Weekly Report - Access Bank - Sept 30th 2011 (150).
NSE Weekly Report - FSDH - Sept 30th (130).
NSE Weekly Report - Lead Capital - Sept 30th (131).
NSE Weekly Report - Lead Capital - Sept 30th 2011 (109)

Week Ended September 23rd:
Afrinvest Weekly Update 23rd September 2011 (110).
NSE Weekly Report - Access Bank - Sept 23rd 2011 (116).
NSE Weekly Report - FSDH - Sept 23rd 2011 (110).
NSE Weekly Report - Lead Capital - Sept 23rd 2011 (109)

- The NSE All-Share Index inched up by 1 basis point this week.
- Bearish sentiments in the banking sector were skewed mainly to top-tier banks this week. Unrelenting sell side pressure during the week sent First Bank to its lowest value in 12 months, closing at N10.00 on Thursday. The stock also generated interest from bargain hunters, curbing the cumulative loss to a 2.4% drop. GTBank similarly had a volatile week, though re-entries also curbed its loss to a 1.9% dip. On the flip side, bullish sentiments resulted in a 16.0% cumulative gain for Unity Bank, while UBA and Ecobank also closed the week with cumulative gains of 3.8% and 5.5% respectively.
- Sentiments were mixed in the breweries sector this week, with NB recording a 9.2% mark-up in price, as strong demand for the stock was sustained throughout the week. On the other hand, Guinness lost 3.5% finding support at the N220.00 price band.
- The food and beverages sector went to the bears this week, with only two companies recording gains in the sector. Nascon and 7-Up inched up with gains of 7.0% and 0.3% respectively, while bearish sentiments shaved off points ranging from 2.1% to 15.2% in Dangote Flour, Dangote Sugar, Cadbury and Honeywell Flour.

Their reports are below:

Afrinvest Weekly Market Update - Sept 16th 2011 (144).

Afrinvest Weekly NSE Update - September 16th 2011 (142).

NSE Weekly Report - FSDH - Sept 16th 2011 (156).

NSE Weekly Report - IBTC - Sept 16th 2011 (168).

Update:

Here are the reports for the prior periods:

September 9th:

Afrinvest Weekly Market Update - Sept 9th (125).

Afrinvest Weekly Update - 9th September 2011 (131).

NSE Weekly Report - FSDH - Sept 9th 2011 (135).

NSE Weekly Report - Lead Capital - Sept 9th 2011 (113).

September 2nd:

Afrinvest Weekly Market Update - Sept 2nd (137).

August 26th:

August 19th:

Here is an excerpts from the meeting communique:

Central Bank of Nigeria
Communiqué No. 78 of the Monetary Policy Committee Meeting, September 19, 2011

The Monetary Policy Committee (MPC) met on 19 th September, 2011 to review domestic economic conditions during the first eight months of 2011 and the challenges facing the Nigerian economy against the backdrop of developments in the international economic and financial environment in order to reassess the challenges facing monetary policy for the rest of 2011.

On the domestic front, the MPC noted that inflationary pressures faced by the domestic economy had slightly moderated following the series of monetary policy tightening measures adopted by the Bank, complemented by a favourable harvest. The output growth remained robust, although the current security challenges could undermine investors’ confidence and output in the near term. Nonetheless, the inflation outlook appears uncertain despite the expected favorable agricultural production, the stability in expectations engendered by the imminent conclusion of the banking sector reforms, and the prospects for a return to a regime of fiscal prudence in the medium-term following the reconstitution of the Federal Government of Nigeria (FGN) Economic Management Team. It is against this backdrop that the Committee considered the monetary policies required to attain the objectives of price and financial stability in the short to medium term.

Key Domestic Macroeconomic and Financial Developments
Output and Prices
The Committee observed that the output growth rate for the second quarter 2011 remained robust. Provisional data from the National Bureau ofStatistics (NBS) indicated that real Gross Domestic Product (GDP) grew by 7.72 per cent in the second quarter of 2011, which is above the 7.69 per cent recorded in the second quarter of 2010. Overall GDP growth for 2011 is projected at 7.85 per cent which is slightly lower than the 7.87 recorded in 2010. The non-oil sector remained the major driver of growth, recording 8.82 per cent growth rate compared with 1.81 per cent for the oil and gas sector in the second quarter of 2011. The growth drivers remained agriculture, wholesale and retail trade, and services, which contributed 2.48, 1.88 and 2.52 per cent, respectively.

Domestic Prices
The Committee noted that the moderation in inflationary pressures, which commenced towards the end of the second quarter of 2011, continuedintothe third quarter. The year-on-year headline inflation rate decreased from 9.4 per cent in July 2011 to 9.3 per cent in August and core inflation decelerated from 11.5 per cent to 10.9 per cent during the same period. However, food inflation rose to 8.7 per cent inAugust 2011, from 7.9 per cent in July. The harvesting of early maturing crops, especially maize, tomatoes, vegetables, potatoes and fruits playeda key role in the moderation of headline inflation. The recently announced government policies and programmes are likely to have asalutary impact on agricultural output, if speedily implemented. These expectations are however currently under threat from anticipated fiscal injections, increased government borrowing to finance the huge fiscal deficit in the 2011 budget, the recent upward revision of electricity tariffs and the anticipated deregulation of petroleum product prices, among other factors.

Monetary, Credit and Financial Market Developments
Broad money (M2) grew by 8.55 per cent in the eight months to August 2011, which annualized to a growth rate of 12.82 per cent. Aggregate domestic credit (net) grew by 14.72 per cent in August 2011 when compared with the level in December, 2010. On annualized basis, the growth in net domestic credit translated to 22.08 per cent compared with the growth rate of 15.0 per centin the corresponding period of 2010.

The growth in aggregate credit was accounted for by increases in credit to the Federal Government and the private sector. Credit to theFederal Government grew by 18.99 per cent, which annualized to 28.48 per cent, close to the indicative benchmark of 29.29 per cent for2011. Similarly, credit to the private sector grew by 10.88 per cent, which annualized to 16.32 per cent, as against the benchmark of 23.34 per cent. With the banking crisis approaching a final resolution with the recapitalization of banks, it is expected that banks will increaselending once integration issues are concluded. Interest rates in all segments of the interbank money market rose in response to the upward review of the MPR at the previous MPC meeting. The Inter-bank and Open Buy Back (OBB) rates both opened at 7.49 per cent onJuly 27, 2011 and rose to 11.0 per cent and 10.36 per cent on September 15, 2011, respectively. The retail lending rates which hadremained relatively high, however, declined during the period. The average maximum lending rate declined to 22.27 per cent in August, 2011 from 22.42 per cent in July. The weighted average saving rate rose to 1.46 per cent from 1.42 per cent over the same period.The consolidated deposit rate declined during the period from 2.42 to 2.30 per cent. Thus, the spread between the average maximumlending rate and the consolidated deposit rate narrowed marginally from 20.0 per cent to 19.97 per cent during the period.

The bearish performance of the stock market continued during the review period as the All-Share Index (ASI) decreased by 15.5 per cent from 24,980.20 at end-June, 2011 to 21,106.67 on September 16, 2011. Market Capitalization (MC) decreased by 15.7 per cent from N7.99 trillion to N6.73 trillion during the same period. Despite the bearish performance, the equity market was more or less fairly valued as reflected in the NSE Price-Earnings (PE) ratios of 10.82 in August 2011, which was close to the 10-year 8-month median of 11.57. Moreover, the performance of the NSE during the review period is consistent with the performance of other stock markets around the world, and reflects lingering risk aversion and deleveraging on the part of foreign institutional investors who are key players on the NSE.

External Sector Developments
At the wDAS, the exchange rate, during the period (July 27 – September 15, 2011) opened at N150.00/US$ and closed at N153.52/US$, representing a depreciation of N3.52 or 2.35 per cent. At the inter-bank segment, the selling rate opened at N151.80/US$ andclosed at N156.30/US$, representing a depreciation of N4.50 or 2.96 per cent during the period. The exchange rate recorded a modest appreciation at the BDC segment where the selling rate opened at N163.00/US$ and closed at N158.00/US$, representing an appreciation ofN5.00or 3.07 per cent. The appreciation recorded in the BDC segment of the market was attributed to the increased supply of foreignexchange by the CBN and the removal of ceilings on DMBs’ sales to BDCs. The Committee noted that the premium between the rates at the WDAS and the interbank stabilized towards the end of the review period, while that of the BDCs narrowed significantly, suggesting the need to sustain existing measures to improve the efficiency of the market.

The Committee also noted the modest accretion to external reserves during the period. Gross external reserves stood at US$34.85 billion on 15 th September, 2011, representing an increase of US$1.12 billion or 3.32 per cent above the level of US$33.73 billion attained on July 21, 2011. The increase was mainly accounted for by increased inflows of royalties into the federation account, reflecting the upward trend in international oil prices and stable oil production in the Niger Delta. Besides, foreign direct and portfolio investments increased over the last eight months. Foreign capital inflows for the first eight months of 2011 stood at US$5.66 billion which is US$1.06 billion or 23.04 per cent higher than the US$4.60 billion recorded in the corresponding period of 2010.

The Committee’s Considerations
The key concerns noted by the Committee were:
1. Continuing expansionary fiscal stance and high component of recurrent expenditure;
2. Liquidity surge expected from AMCON intervention, following conclusion of bank recapitalization;
3. Sharp rise in month-on-month headline inflation rate despite falling headline inflation rate on year-on-year basis;
4. Need to have positive real interest rates; and
5. Persisting demand pressure in the foreign exchange market, driven by significant liquidity injections and reflecting structural deficiencies that have perpetuated the import dependence of the economy.

The Committee considered that given the difficult and uncertain international environment, it is important to ensure that the current trends in growth are sustained and price stability is maintained. The recent data on inflation showed that the headline inflation rate has been maintained within single digit for two consecutive months. However, concerns remain about sustaining the present inflation trend. The Committee viewed the rise in the monthly headline inflation rate in August which, while justifiable from the point of view of the large household expenditures on account of festivities, was sharp and out of line with the trend in the preceding 11 months. Besides, the anticipated high liquidity in the near future would have a bearing on inflation. The fiscal stance continues to be expansionary. The announcement of a target of one (1) per cent annual reduction in government recurrent spending when viewed in the context of the anticipated injections associated with the implementation of the new national minimum wage, suggests that thefiscal retrenchment is likely to be drawn-out. In addition, there is the weight of structural factors such as the announced hikes in electricity tariffs and the expected removal of petroleum subsidy.

Moreover, the AMCON injection of N3.0 trillion is going to add to liquidity surge with attendant adverse impact on prices. It is forthese reasons that the Committee felt the need for further tightening of monetary policy. On the other hand, the Committee noted that rates have been increased in the last four consecutive MPC meetings and that high lending rates increase the cost of finance for SMEs and this has an adverse consequence for growth and job creation. However, having considered the arguments for and against tightening, the Committee voted for maintaining the stance of tightening in the short term. The Committee emphasized that for monetary policy to be effective it would need to be complemented by other policies, both structural and fiscal. Monetary policy can onlyaddressthe monetary aspects of inflation while fostering growth and financial stability. The need for accelerating fiscal retrenchment and structural adjustment can therefore not be overemphasized.
Decisions:
In the light of the above considerations the Committee decided as follows:
1. A majority of 8 to 3 members voted for a tightening of monetary policy.
2. Seven (7) members voted for a 50 basis-point increase in MPR from 8.75 to 9.25 per cent. One (1) member voted for a 100- basis-point increase in MPR. The 3 remaining members voted to maintain the MPR at the current rate.
3. A Unanimous decision to:
a. maintain the current symmetric corridor of +/-200 basis points around the MPR; and
b. retain the current CRR of 4.0 per cent

You can download the report below:

Company Analysis - Afrinvest - Dangote Cement - July 2011 (342).

Company Analysis - Flour Mills of Nigeria - Fy 2011 Earnings Release Report - Vetiva (269).

Company Analysis - FSDH - Dangote Sugar - July 2011 (256).

Company Analysis - FSDH - Cadbury Nigeria PLC - July 2011 (612).

Company Analysis - FSDH - Unilever Nigeria Plc - June 2011 (206).

Company Analysis - Glaxo Smithkline - 2011 - FSDH (249).

Company Analysis - Oceanic Bank - July 2011 - Proshare (259).

Company Analysis - Unilever Nigeria Plc - June 2011 (256).

Company Result - Afrinvest - Berger Paints Plc FY 2010 Result (198).

Company Result - Afrinvest - Cadbury Nigeria PLC - H1 2011 Result (223).

1. To tighten monetary policy by a majority decision of 10 to 2.
2. To raise the MPR by 75 basis points from 8.0 per cent to 8.75 per cent by a majority vote of 8 members in its favour, 1 member favoured 50 basispoint increase while 3 members voted for holding the MPR at 8.0 per cent.
3. To maintain the corridor at +/- 200 basis points around the MPR.

Below is the summary from the communique of the meeting:

The Monetary Policy Committee (MPC) met on 25th and 26th July, 2011 to review domestic economic conditions during the first half of 2011 and the challenges facing the Nigerian economy against the backdrop of developments in the international economic and financial environment in order to chart the course of monetary policy in the second half of the year.

On the global scene, the Committee noted with concern the enormity of the challenges being faced by the US and euro zone countries as well as the major emerging market economies such as the fiscal position of Brazil, possible real estate bubbles in China and seemingly intractable inflation in  India, which may impact the Nigerian economy adversely through several channels. The economic slowdown and the commodity price inflation in the international economy as well as the rapid increase in prices of some asset classes in some emerging market economies remain serious threats to the global economic recovery. There are continuing widespread threats of inflationary pressures fuelled by the sustained high energy, commodity and food prices in the global economy. Headline inflation in many of the major emerging market economies is now exceeding 6 per cent and is running close to or above central banks’ targets in a number of other larger economies.

The performance of the global financial markets was mixed. Many national currencies in Africa depreciated against the US dollar while in many emerging markets, currencies appreciated vis-à-vis the US dollar during the first half of 2011. Furthermore, most stock markets around the world showed weak recovery during the period due to high inflation, weakening consumer confidence and government finances, particularly in the US and eurozone. The unfolding debt crises in the European periphery could damage confidence and output in the near-term while the US debt and unemployment situation pose grave danger to the international economy given the reserve currency role of the US dollar and the size of the US economy. It is not unlikely that the US will lose its AAA rating and actual default is possible unless a deal can be worked out between the White house and the Congress.

On the domestic scene, the Committee noted that inflationary pressures which were traceable to the high expenditure levels associated with the April 2011 general elections as well as the effects of rising international energy, commodity and food prices had moderated by June 2011. This development was due in part to the tight monetary policy stance of the Bank since September of 2010. However, the Committee observed that the inflation outlook appears uncertain owing to the expected implementation of the new national minimum wage policy and the imminent deregulation of petroleum prices.

Significant injection of liquidity from FAAC in the third quarter coupled with the impact of AMCON recapitalizing intervened banks to the tune of N1.6 trillion will both add to inflationary pressures. The Committee welcomed the favorable growth projections but cautioned that the current security challenges, infrastructural bottlenecks and the uncertainty in the international economy as well as fiscal developments could undermine investors’ confidence and output growth in the near term.

The Committee expressed serious concerns about the continued sluggish growth of credit to the private sector during the first half of the year which is attributed, among other factors, to the heightened credit risk in the real economy as a result of the persisting structural problems occasioned by the inadequate power supply and critical infrastructure deficit. It also observed that the lending rates of deposit money banks (DMBs) remained relatively high.

You can download the full communique below:

And here is the communique from the June meeting:

Before the July 25th and 26th meeting, Afrinvest, Access Bank, and Vetiva had released preview documents of the Central Bank’s decision, you can read them below:

Monetary Policy Committe Decision Preview - Access Bank - July 25th 2011 (185).

Monetary Policy Committee Communique - Afrinvest - July 26th 2011 (182).

Week of July 18th – 22nd:

Week of July 25th – 29th:

Week of August 1st – 5th: