A member of the Central Bank of Nigeria (CBN)-led Monetary Policy Committee (MPC), Bala Bello, has listed key indicators that have overtime, kept domestic and domestic investors attracted to the domestic economy.
In his personal statement during the last MPC meeting held in Abuja, he said the external reserves position have grown remarkably to $40.88 billion as of 21st November 2024 from $40.06 billion at end-October 2024.
The upsurge in reserves levels, he said strengthens the needed buffer to mitigate unforeseen risks and reinforces the importance of ongoing efforts at sustaining improved foreign exchange supply.
Bello said the rising reserves position, alongside the relatively stable exchange rate, would enhance Nigeria’s position as an attractive investment destination.
He maintained that the resilience of the domestic economy, bolstered by a strong financial system with robust soundness indicators, instils confidence in the economic structure.
“Major prudential ratios, such as capital adequacy, liquidity, and Non-Performing Loans ratios, were within prudential limits, reflecting proactive regulatory oversight and strong industry risk management practices. Significant credit was extended to growth-enhancing sectors such as agriculture, manufacturing and general commerce, as well as individuals and households,” he said.
According the MPC member, this credit played a crucial role in stimulating economic activities and supporting output performance, emphasizing the role of financial institutions in the economy.
He disclosed that the results of stress tests showed that bank’s solvency and liquidity ratios remained resilient in scenarios of potential severe macroeconomic shocks. Continued vigilance is, however, required to ensure that the banking system remains strong and stable amid lingering risks.
He added that everyone has a role to play in this, and our collective vigilance is crucial for the stability of our financial system.
Continuing, he said that notwithstanding, Nigeria’s Real Gross Domestic Product (GDP) has maintained a positive trajectory, with a growth rate of 3.46 per cent in the third quarter of 2024, compared with 3.19 and 2.54 per cent in the preceding and corresponding periods, respectively.
“This growth, driven by both the oil and non-oil sectors, with a notable contribution from the Services sector, is a testament to the resilience of our economy. The non-oil sector grew by 3.37 per cent in the third quarter, compared with 2.80 per cent in the second quarter, while the oil sector grew by 5.17 per cent (year-on-year), compared with 10.15 per cent in the preceding quarter. The positive growth 12 momentum, shown by leading indicators and staff forecasts, is expected to persist, providing a sense of stability and progress,” he said.
Another MPC member, Aloysius Ordu, said CBN staff presentations show noteworthy green shoots since the era of tight money began.
“First, there has been a marked improvement in the current account balance. Q3 2024 data shows a surplus of $6.29 billion vis-à-vis US$5.14 billion in Q2 2024; and the overall balance of payment position recorded a surplus of $3.79 billion,” he said.
“Second, the external reserves stood at US$40.88 billion at end-October 2024, a remarkable 16.9 months of import cover. The exchange rate remained relatively stable for most of the second half of 2024, reflecting increased capital inflows on account of attractive yields,” he added.
On his part, another member of MPC, Bandele Amoo, said Nigeria’s Balance of Payments (BOP) position remained stable to support our external sector stability.
The BOP provisionally recorded a surplus in the 3rd Quarter of 2024 driven by positive balances in the current account and net asset acquisition positions.
The overall account positively stood at $3.79billion as at Q3 of 2024. Meanwhile, portfolio inflows remain high, recording a net inflow $0.59 billion as at November 2024.
“The total foreign exchange flows through the economy stood at US$6,175 billion in September 2024 compared with $2,570.6 billion in August 2024. Furthermore, foreign reserves at the end of October 2024 stood at $39.68 billion, equivalent to several months of import cover”.
“External reserves is projected to further increase by year end due to expected reduction in import demand pressures arising from the full deregulation of the downstream oil sector, reduced petroleum products importation regime, increased inflows and other process management by the CBN,” he said.
