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First MPC Meeting in 2019 …MPR Retained at 14%

The Monetary Policy Committee held its first meeting of the year on the 21st and 22nd of January 2019. The Committee voted to maintain the MPR at 14.00%.



The Monetary Policy Committee held its first meeting of the year on the 21st and 22nd
of January 2019. The Committee voted to maintain the MPR at 14.00%, CRR at 22.5%
while also retaining the asymmetric corridor at +200bps & -500bps and liquidity rate
at 30%.
The Committee considered the divergent performance across most economies in
2018, which led to the moderated global output. The Committee further noted the
rising global uncertainties due to the increasing financial market volatilities, trade
tension between the US and China, slowdown in Chinese economy, amongst others.
On the back of increased downside risks, the IMF moderated its global growth
projection to 3.5% from 3.7%.
In the domestic space, the Committee noted the improvement of some key economic
indicators in 2018, which includes; the gradual improvement in output growth,
Q3:2018’s GDP grew by 1.81% from 1.50% in Q2:2018; stability in exchange rate,
supported by the continuous CBN interventions; and the moderation in inflation rate
for most part of the year.
The heightened political uncertainties due to the upcoming elections may continue
to weigh on activities within the financial market. The decision to keep rates
constant should therefore not have any major impact on the performance of the
equities and fixed income markets.

Committee’s Considerations

  • The Committee assessed both the global and domestic macroeconomic and
    financial environment in 2018. The Committee considered the key risks and
    outlook in the short to medium term.
  • In the global economy, the Committee noted the heightened uncertainties in
    2019, as a result of factors such as the increasing financial market volatilities,
    trade war between the US and its key allies, continued monetary policy
    normalization by the US, negotiations surrounding Brexit, and the slowdown in
  • On the domestic front, the Committee commended the improved output growth
    as shown by the higher GDP growth of 1.81% in Q3:2018 from 1.5% in Q2:2018.
    The Committee highlighted the major drivers of growth to include the services
    and agriculture sectors, but however mentioned that the herdsmen and farmers
    conflict, alongside flooding in some part of the countries moderated agricultural
    and livestock outputs. While growth in 2019 is expected to be driven by improved
    oil and non-oil sector receipts, the Committee however stated that the growth
    outlook remains fragile.
  • The resurgence of inflationary pressure in the economy was of concern to the Committee, as the headline inflation rate inched up to 11.44% in December 2018
    from 11.28% in November 2018. The Committee observed that the near-term risk
    to inflation remains the residual impact of flooding on agricultural output,
    insecurity in agriculture producing states and campaign related spending towards
    the 2019 general election.
  • The Committee stated the improvement in credit to the private sector and the
    government in December 2018. The Committee noted the aggressive growth in
    credit to the private sector which has been a constraint to real sector growth and
    further expressed optimism for improved lending to MSMEs in the economy.
  • In the case for tightening, which was more likely, the Committee noted that
    tightening will result in the reversal of gains achieved thus far and will drive banks
    to reprice assets, thus increasing the cost of credit and elevating credit risk in the
    economy. The Committee further noted that it may result in an increase in Non-Performing loans, and also dampen investments and the improvement noted in
    output growth.

▪ Key Decisions

  • Maintain MPR at 14%
  • Maintain CRR at 22.50%
  • Retain liquidity ratio at 30%
  • Retain asymmetric corridor at +200 and -500bps around the MPR.

Anticipated Impacts

Unflinching Investors’ sentiment, despite MPC Decision
Since the last MPC meeting, Treasury bills yields have remained relatively high,
recording a 0.53% increase to reach 14.69% on January 22, 2019. The secondary market for bonds however recorded a 0.24% decline in yields to settle at 15.21% on January 22,2019. The high yield in both markets, coupled with the poor performance of the equities space due to the cautious choice for low-risk investments should continue to encourage the influx of participants to the fixed income space. Consequently, we do not foresee any changes in the yield environment, due to the decision to keep the rate constant.

Loan performance continues to Improve

At the recent meeting, the MPC noted the encouraging growth in the lending to the
private sector in 2018. The Committee however reiterated the need for improved
lending to the private sector as net credit to the private sector increased by 5.13% YoY
in November 2018, annualized to 4.95% which was lower than the 2018 benchmark
rate of 12.4%. The MPC also expressed satisfaction regarding the reduction in the level
of NPLs in the banking sector.
We expect that with the intensified efforts towards increasing credit to the private
sector, the improved asset quality and partnership between the Banker’s committee
and Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL)
will go a long way towards achieving this goal. We also envisage some payment to
contractors by the government in the coming months which should further
moderate the NPLs in the banking sector.

Improved Activities within the Real Sector

The credit to the real sector improved towards the end of 2018. Increased funding
came through the industry-wide interventions such as the anchor borrowers’
programme, CBN agribusiness scheme and MSME funds. By December 2018, the real
sector sustained its healthy performance, with the manufacturing PMI rising by 2.2pts
to 61.1pts, the highest in 2018.
The industry’s economic welfare was also buoyed by the continuous FX interventions
by the CBN; however, the sector faced some headwinds as consumer spending grew
slowly, moderating the growth in the sales of goods and services offered by the
sector. Logistical challenges, owing to insecurity and flooding also pressured growth.
Despite the political uncertainties which heightened towards the end of 2018, the
sector grew, owing to the incentives put in place by the CBN. We expect the CBN to
continue to support the real sector through concessionary lending schemes and
moral suasion strategies with the banks. We also expect the continued CBN intervention to sustain FX liquidity and stability, in a bid to curtail FX pressures in the industry.

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The Market Set to Look Away

The mood in the equities market remains largely negative. Increased political
uncertainty ahead of the elections continues to sour investor confidence. Opportunities
for bargain hunting has however supported the moderation of the decline in the
NSEASI. We do not expect the decision to hold rates to alter the current bearish course of the market, especially given the attractive yield environment in the fixed income space.
In our opinion, the prevailing political risks has more weight in dictating the current course of market activities, at least for the rest of this quarter.

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Ecobank Transnational appoints Alain Nkontchou as new Chairman

“I am honoured to be appointed as Chairman of Ecobank Transnational Incorporated.”



Alain Nkontchou

Ecobank Transnational Incorporated (ETI) has announced the appointment of Alain Nkontchou as its new Chairman of the board of directors.

Nkontchou, who is Camerounian by nationality, has been serving as an Independent Non-Executive Director of the pan-African banking group since 2015. A statement made available to the Nigerian Stock Exchange (NSE) confirmed that his latest appointment took effect on June 30, 2020.


The Camerounian is taking over from Nigeria’s Emmanuel Ikazoboh, whose six-year tenure as Chairman of Ecobank’s holding company ended last month, even as he just reached the retirement age of 70.  The company also noted that the new appointment is in tandem with its Articles of Association.

While reacting to his own appointment as Chairman, Alain Nkontchou said he is quite honoured and that he was looking forward to working with the rest of the board members.

“I am honoured to be appointed as Chairman of Ecobank Transnational Incorporated. Having served on its Board since 2015, I have seen Ecobank’s resilience and its proud history, built on strong foundation to secure the Bank’s future success. I look forward to working with the Board and Executive team as we continue our journey ahead and I know that we are well-placed to navigate through the current environment and set the standards in financial services for our customers across Africa. I would also like to express my thanks to my predecessor, Mr Emmanuel Ikazoboh, for his leadership of the Board and to wish him all the best for the future,” he said.

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Alain Nkontchou co-founded Enko Capital Management LLP, a London-based asset management company with Johannesburg office. He currently serves as the Managing Partner and of the firm which specialises in prospecting investment opportunities in Africa.

Prior to this time, ETI’s newly-appointed Chairman was a Non-Executive Director at Laurent Perrier champagne between 1999 and 2009. He was also the Managing Director of Credit Suisse’s Global Macro Trading from 1995 to 2008. He held a similar role at JP Morgan Chase & Co.

Meanwhile, from 1989 to 1994, Nkontchou worked with Chemical Bank first in Paris and then New York. At the bank, he rose through the ranks to become the Vice- President, Head of Trading, and Sales. Apparently, he is an accomplished business executive.

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Alain Nkontchou obtained an MSc in Electrical Engineering from Supélec and P.M. Curie University, Paris, and another MSc in Finance and Accounting from ESCP (Ecole Supérieure de Commerce de Paris).

It should be noted that ETI’s stock closed yesterday’s trading session on the Nigerian Stock Exchange with a share price of N4.80. The share price gained by +1.05% to appreciate from its previous close of N4.75. Year to date, ETI’s share price has declined by about 22%.

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Economy & Politics

Nigeria’s public debt is officially N29.83 trillion

Further disaggregation of Nigeria’s total public debt showed that N9.99trn or 34.89% of the debt was external.



Q1 2020 National Debt report

The total public debt stocks of the Federal Government of Nigeriastates within the Nigerian federation, and the Federal Capital Territory (FCT) jumped to N28.63 trillion as of Q1 2020. This is according to a report by the National Bureau of Statistics (NBS) which was released on Friday. 

A breakdown of the report showed that the total debt stock of the states as of 31 March 2020 is N4.1 trillion. Meanwhile, these states’ total Internally Generated Revenue (IGR) for 2019 was N1.3 trillion. They also received N2.47 trillion from FAAC. 


Note that as always, Lagos State recorded the highest IGR at N398.7 billion. The state also received N117.8 billion in FAAC disbursements and has a total debt stock of N444.2 billion, thereby making up 10.8% of the total debt stock of the states. 

On the other hand, Yobe State recorded the lowest debt stock out of all the states with just N29.2 billion. This made up just 0.7% of the total debt stock of the states. Meanwhile, the state generated a total IGR of N8.4 billion in 2019. 

Part of the report by the NBS said: 

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“Nigerian States and Federal Debt Stock data as at 31st March 2020 reflected that the country’s total public debt portfolio stood at N28.63trn. Further disaggregation of Nigeria’s total public debt showed that N9.99trn or 34.89% of the debt was external while N18.64trn or 65.11% of the debt was domestic. 

“Similarly, States and FCT domestic debt was put at N4.11trillion with Lagos state accounting for 10.8% of the total domestic debt stock while Yobe State has the least debt stock in this category with a contribution of 0.7%.” 

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Meanwhile, the FCT had total debt of N106.8 billion, making up 2.6% of the total debt stock of the states. The FCT also recorded an IGR of N74.5 billion in 2019 and received N71.9 billion in FAAC. 

The Federal Government’s total domestic debt stock by Q1, 2020 was N14.5 trillion, with FGN bonds making up 72.5% of the total portfolio followed by treasury bills at 18.24%. 

The total public debt stock has risen by 4% since December 2019, as the previous figure stood at N27.4 trillion. 

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You may download NBS’ Nigerian Domestic and Foreign Debt report by clicking here.  

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COVID-19: WHO reverses itself based on new discovery about the virus

This admission is coming on the heels of criticisms from experts.



WHO warns countries against rushing to lift coronavirus restrictions

The World Health Organization (WHO) has provided an update on the modes of transmission of SARS-CoV-2, the virus that causes COVID-19, from infected people, based on new scientific evidence.

The WHO on Thursday, formally recognized that the coronavirus can be transmitted indoors by droplets in the air, marking a reversal for the United Nation’s agency.


In a scientific brief, the WHO said that people who spend time in crowded places with poor ventilation are at risk of being infected by the coronavirus as the droplets circulate throughout the air in indoor gatherings.

This admission is coming on the heels of criticisms from experts who have been putting pressure on the UN health agency to update its description of the spread of the virus to include the possibility of airborne infections.

The WHO now admits that transmissions through aerosols, or tiny air droplets, could have been behind outbreaks of COVID-19 that have been reported in some closed environments such as restaurants, nightclubs, places of worship or places of work where people may be shouting, talking or singing.

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Apart from refraining from having close contact with infected people and frequent hand-washing, the WHO pointed out that people should avoid crowded places, close-contact settings, and confined and enclosed spaces with poor ventilation.

However, the WHO still focuses more on the spread of the virus by larger droplets that are discharged through coughing, sneezing and singing or from contact with a contaminated surface.

The WHO in its statement said, “Respiratory droplet transmission can occur when a person is in close contact (within 1 metre) with an infected person who has respiratory symptoms (e.g. coughing or sneezing) or who is talking or singing; in these circumstances, respiratory droplets that include virus can reach the mouth, nose or eyes of a susceptible person and can result in infection.”

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It also revealed that based on what is currently known, the transmission of COVID-19 primarily occurs from people when they have symptoms and can also occur just before they develop symptoms when they are in close proximity to others for prolonged periods of time. While someone who never develops symptoms can also pass the virus to others, it is still not clear to what extent this occurs and more research is needed in this area.

The UN health agency had previously advised that the spread of the virus through the air is only common when people, mostly health care workers, were involved in medical procedures that produced aerosols, though a lot of evidence has surfaced suggesting that the virus can stay in the air for hours and infect a person when inhaled.

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