1. CDL INVESTORS
FORUM
2013 NIGERIA MACRO-ECONOMIC UPDATES
25TH APRIL 2013

2. Outline
I The Global Economy 3
II Nigeria Political Updates 4
III Nigeria Macro-economic updates 5
IV Outlook on Inflation 7
V Exchange Rate 9
VI Monetary Policy Rate 11
VII Budget 2013 Crude Oil Estimates 12
VIII JP Morgan Effect on FGN Debt Instruments 13
IX Outlook for the rest of the year 15
X CDL Chronology 16

3. Global Economy – Key Issues
 Developed Economies
 US Markets hit new
records
 Japan embarks on
ambitious inflation bid
 ECB cuts rate to record
low of 0.5%
 Emerging Markets
 BRICS aims to set up
devt’ bank to rival the
World Bank
 If only India will get its
politics right
 Mixed signals from China
 MENA, Sub-Saharan Africa
 Oil, oil and more oil
 Ghana in bid to ensure
bond price transparency
 The Kenyan Anti-climax
 North Africa in post-
revolution blues
 Sudan and South Sudan:
“On oil we stand”
 Commodities
 Is Gold fading?
 IEA & OPEC lower oil
demand forecasts
 OPEC aims to trim
supply to firm up prices
 Analysts forecast oil to
remain around $98 -
$105 pb in 2013

4. Nigeria Political Updates… Early kick-off for 2015
 In-house politicking within ruling
party ahead of 2015
 Nigerian Governors’ Forum
becomes battle ground
 Focus gradually shifts from
economic reforms to politics
 EIU Latest Ranking: Nigeria is
classified as a Hybrid Regime on
120th position below Sierra-Leone,
Libya, Haiti and Pakistan
 Opposition Parties in Merger Deal
 A Kenyan inspired model
 Three (3) APCs emerge
 Early punts favour ACN faction
within the group (Broom emblem,
Fashola, etc.)
 Echoes from SDP – NRC era
PDP, 58.
9%
APC, 39.
8%
Others,
1.30%
A retrospective view of 2011 Presidential
elections with a united opposition
Source: CDL Research
1

5. Nigeria Macroeconomic Updates
 The PIB still stuck in the National Assembly!
 Power Sector Reforms going well for now
 GDP rebasing has been postponed for the umpteenth time
 Banking reforms perceived to be successful
 CBN Governor opts for single term
 Nigeria’s improving economic profile (MINT, Global X Funds, Barclays
Bond Index)
 Nigeria to raise $1 billion Eurobond to finance power and other
infrastructure in June 2013 … NOI
 A fumbling and wobbling naira?

6. 2013 Fiscal Scenarios
Scenario I Scenario II Scenario III
Oil Price (USD) 90 100 110
Benchmark Oil Price ($pb) 79 79 79
FGN Debt / GDP 18% 17.5% 17%
Average FX Rate (N/$) 166 – 168 160 – 162 156 – 158
Inflation 15% 9.73% 12%
Official FX Reserves $47.5 b $50 b $55 b
Real GDP Growth 5% 7% 7 – 8%
Monetary Policy Rate 11.75% 12% 12.25%
Sources: Agusto & Co, NBS, CDL Research

7. Outlook on Inflation
Source: FDHL, NBS

8. Assumptions on Inflation
 The CBN in-house forecasts suggest that the rate of change in
headline prices between March and August 2013 will average 9.6%
and range between 8.8 – 10% – with the trough being in March.
 This implies that the inflation rate may accelerate in the months to
come especially as the food planting season kicks off.
 CBN will continue to pursue managed tightening monetary policies
 However we still expect inflation to close the year in single digit,
broadly in line with the NBS’s 9.73% forecast for 2013.
 Pump price of petrol to remain at N97/l in 2013. Budget 2013
adequately caters for the fuel subsidy
 No wage pressures in 2013 fiscal year
 The new tariff regime on Rice & Sugar and imported food inflation
 Import duty and levy on raw sugar will be 10% and 50% respectively
 Refined sugar will attract 20% duty and 60% levy
 Rice: 10% import duty and 100% levy will be applied to both brown and
polished rice.)

9. Exchange Rate: How’s the Naira doing?
-
0.50
1.00
1.50
2.00
2.50
3.00
Billions
FX Dd & Ss by CBN
Amount Offered (US$) Total Sold (US$)
FX SS
drops on
JPMorgan
3
Source: FDHL

10. Nigerian Naira Proving Resilient For Now…

11. What’s your take on MPR?
 The slow-down in the CPI increases
the risks of a rate cut
 We expect the MPC to maintain its
cautionary stance on a rate cut as it
is more disposed to achieving
exchange rate stability
 We do not envisage a cut in rates at
the May 20 – 21 MPC meeting
 We believe the bank will continue to
use Open Market Operations (OMO)
to manage liquidity in the system
and steer inter-bank rates to desired
levels
 The political class and leading
business groups such as LCCI to
put more pressure on the CBN to
adopt a more accommodative
interest rate policy
0.25%
Cut
0.5% Cut
0
1
2
3
4
5
6
7
8
9
10
Sep-12 Nov-12 Jan-13 Mar-13
VotingMembers
Voting Pattern of MPC Members
Hold Cut
5
Source: CBN

12. Budget 2013 estimates… Can Nigeria achieve
2.53mbd in oil production in 2013?
Source: CBN Economic Reports

13. Bond Market – The JP Morgan Effect

14. Treasury Bills Market

15. Outlook for the rest of the year
The widening of yields on bonds and treasury bills will present good
re-entry levels for FPIs
AMCON bonds to become secondary market trading instruments
(Q3, 2013) as appointment of market makers in the offing
IMF call on AMCON to dampen initial appetite for the bonds amongst
FPIs
AMCON to exit the three nationalised banks (Q3 – Q4 2013)
The success (near to medium term) of the Power Sector Reforms
may be hinged on Transmission (still under pseudo-state control)
Oil theft and vandalisation may continue to stymie Nigeria’s crude oil
output
Big Ticket Loan Syndications (Dangote Cement - $3.5b, MTN -
$1.8b, Indorama - $0.8b, Accurgas - $0.225b) kick start credit market
Flurry of capital raising by Tier 2 Banks in bid to join syndication clubs

16. 2006 2006 2007 20121996
Commenced
operations with
N200m in SHF
Net profit crossed
the N1b mark
Moved into CDL
HOUSE
Appointed PDMM in
May-06 by DMO
Appointed Money
Market Maker by
CBN
CDL’s SHF crossed
the N25B threshold
N25b
2012
CDL CHRONOLOGY

17. Important Risk Warnings and Disclaimers
Consolidated Discounts Limited (CDL) is regulated by the Central Bank of Nigeria (CBN).
USE OF THIS PUBLICATION FOR THE PURPORSE OF MAKING INVESTMENT DECISION
EXPOSES YOU TO RISK OF LOSS.
Reception of this publication does not make you a client or provide you with the protection
afforded to clients of CDL.
All information is provided for information purposes only. Every effort is made to ensure that all
information given in this publication is accurate, but no responsibility can be accepted by CDL
Research or the Consolidated Discounts Limited Group, their agents or employees, for any errors or for
any loss arising from use of this publication or the information contained herein. No part of this
publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any
means, electronic, mechanical, photocopying, recording or otherwise, without the prior written
permission of CDL Research and the Consolidated Discounts Limited Group.
© CDL 2013. All rights reserved.
Consolidated Discounts Limited
67 Marina
Lagos.
Tel: +234-1-2778218
www.cdlnigeria.com