The document summarizes economic trends in Nigeria for March 2015. It notes that global growth is expected to be led by the US economy in 2015, but US consumer spending has slowed in early 2015, pointing to slower Q1 growth. Oil prices rose in February but most metals prices fell. In Nigeria, the Senate revised budget assumptions for 2015, lowering the oil benchmark price. The IMF commended Nigeria's economic diversification efforts but noted vulnerabilities remain. Nigeria's GDP growth declined to 5.94% in Q4 2014, led by the non-oil sector. Inflation rose in January while interest rates increased. The CBN devalued the naira and closed the official exchange rate window in February.

1. Nigerian Export-Import Bank
March 2015
Economic & Trade Trends
Manufacturing , Agriculture, Solid Minerals and Services Sectors
Global Developments
A slower Q1 growth in the US?
The IMF in its January World Economic Outlook report projected global
economic growth in 2015 at 3.5%, slightly higher than 3.3% in 2014, on
the back of improved consumer spending expected to be spurred by the
savings from lower oil prices. Growth was expected to be led by the US
economy. However, contrary to the IMF forecast, current trends have
shown continued cut back on purchases by households, especially in the
US, where consumers have shown more preference to save. Recent data
showed that US consumer spending, which accounts for more than two-
thirds of US economic activity, fell for a second straight month in Janu-
ary and factory activity and construction spending slowed in the first
two months of the year. This points to a slower Q1 growth with implica-
tions for overall global economic growth.
Contact: strategy@neximbank.com
Global Commodities
Oil prices which averaged $58.19/barrel in February ranged between
$49.08 and $62.21 per barrel, as against an average price of $49.52/
barrel and a range between $47.10 and $56.31 per barrel in January.
Brent Oil price which opened in February at $49.08/barrel, firmed up
amid fluctuations during the month to close at $60.61/barrel as de-
mand slightly rose along with slight improvements in OECD Americas.
We expect the price trend to continue in March.
Prices of most metals contracted in February. Base metals remained
depressed on a steep increase in inventories, especially Copper and
Iron Ore which experienced significant y-t-d price declines of –7.04%
and –12.12%, respectively. Although Gold and Silver declined slightly
on month on month basis, they remained firm year-to-date at 0.39%
and 3.75%, respectively. The precious metals are some of the dollar-
denominated commodities affected by the strengthening dollar which
has been soaring over concerns about the prospects of rising US inter-
est rates.
Most agriculture commodities in our basket had recorded negative
year to date growth with the exception of cocoa and cotton the prices
of which rose 3.41% and 4.90%, respectively. The worst price declines
were recorded by coffee and palm-oil at –11.87% and -11.22%, while
corn and sugar dropped by 7.1% and 3.7%, respectively. On a month on
month basis, all prices were relatively depressed compared to the
trend in January. Cocoa prices fell in the month due to expectations of
improved supply.
Selected
Economies 2013(%) 2014 (%) 2015f (%)
World 3.3 3.3 3.5
United Sates 2.2 2.4 3.6
Euro Area -0.5 0.8 1.2
Japan 1.6 0.1 0.6
China 7.8 7.4 6.8
India 5 5.8 6.3
Brazil 2.5 0.1 0.3
Nigeria 5.4 6.1 4.8
South Africa 2.2 1.4 2.1
50
60
70
80
90
100
110
120
05-Jan-15
08-Jan-15
11-Jan-15
14-Jan-15
17-Jan-15
20-Jan-15
23-Jan-15
26-Jan-15
29-Jan-15
01-Feb-15
04-Feb-15
07-Feb-15
10-Feb-15
13-Feb-15
16-Feb-15
19-Feb-15
22-Feb-15
25-Feb-15
Brent Coal
30
50
70
90
110
130
05-Jan-15
08-Jan-15
11-Jan-15
14-Jan-15
17-Jan-15
20-Jan-15
23-Jan-15
26-Jan-15
29-Jan-15
01-Feb-15
04-Feb-15
07-Feb-15
10-Feb-15
13-Feb-15
16-Feb-15
19-Feb-15
22-Feb-15
25-Feb-15
31/12/13=10
0
Metals
Copper Lead Iron-Ore Gold Silver Tin
Energy Commodities
Agriculture Commodities
Metals Commodities
60
70
80
90
100
110
120
05-Jan-15
09-Jan-15
13-Jan-15
17-Jan-15
21-Jan-15
25-Jan-15
29-Jan-15
02-Feb-15
06-Feb-15
10-Feb-15
14-Feb-15
18-Feb-15
22-Feb-15
31/12/14=100
Corn Cocoa Coffee Palm Oil Cotton Sugar

2. Budget 2015: Senate revises assumptions, to pass budget in March -
On February 25, the Senate Committee on Appropriation says it has
adopted a lower benchmark oil price of $52/barrel compared to $54/
barrel by the House of Reps for the 2015 budget. The Senate also adopted
an exchange rate of N190/$, as against $65/barrel and exchange rate of
N160/$ earlier proposed by the executives in their last submission to the
senate in December 2014. This is in light of the current trends in the oil
and foreign exchange markets. The Senate is also set to reduce the recur-
rent expenditure to allow an increase in capital expenditure. It is hoped
that the Senate will pass the budget in the month of March.
Nigeria signs Article IV agreement with IMF -
The IMF in its report released on 27 February commended the Nigerian
authorities for the progress in promoting Nigeria’s economic diversifica-
tion and for their macroeconomic response to collapsing export prices.
They however noted that vulnerabilities remain high in view of the un-
certainties about oil price, security concerns, and the political situation.
It also agreed that additional policy adjustments and broader structural
reforms will be necessary in the period ahead to reconstitute buffers,
mitigate risks, and meet pressing development needs. While agreeing
that tightening fiscal policy and allowing the exchange rate to depreciate
while using some of the reserve buffer were appropriate responses to
the recent fall in oil prices, the IMF emphasized that improved budgeting
at the States and Local Government levels are critical to effective fiscal
management. The report hinged Nigeria’s long term prospects on lower
oil dependency and stronger private sector participation in economic
activity. The IMF expects the economy to grow at 4.75% on the back of
contraction in public investment and domestic demand. This growth pro-
jection is however lower than the target of 5.5% in the 2015 FGN budget.
Output Growth Declines Further in Q4, 2014
Nigeria’s gross domestic product grew by 5.94% y/y in the fourth quarter
of 2014, lower than 6.23% recorded in the previous quarter and 6.77% record-
ed in the corresponding period of 2013. This brings GDP growth in 2014 to
6.22%, higher than 5.45% in 2013.
The non-oil sector remained the key driver of growth during the quarter,
growing by 6.44% which is a decline against 7.51% in the preceding quar-
ter and 6.71% in the corresponding period of 2013. Growth in the Oil sec-
tor however rebounded, albeit slightly, to 1.18% from -3.60% in the pre-
vious quarter and -9.36% in the corresponding period of 2013.
Services sector maintained its position as the leading contributor to GDP
in Q4 with a contribution of 53.48%, as against 23.86% and 22.66% from
agriculture and Industry. However, Industry sector grew faster than the
other two sector groups at 7.96%, compared to growth rates of 6.15% in
services and 3.64% in agriculture. Pharmaceuticals & Chemicals and Ce-
ment were the fastest growing (y-o-y) sectors in Q4 at 32.92% and 32.01%
respectively, while Oil refining recorded the worst performance at –
25.15%.
Nigerian Export-Import Bank
March 2015
Economic & Trade Trends
Manufacturing , Agriculture, Solid Minerals and Services
Domestic Economy
Contact: strategy@neximbank.com
FGN Budget Assumptions 2014 2015
Benchmark Oil Price (US$/Bl) 77.5 52
Crude Oil Production (mbpd) 2.3883 N/A
Average Exchange Rate 160.00 190
GDP Growth (%) 6.75 5.0
4.45
5.4 5.17
6.77 6.21 6.54 6.23 5.94
-11.4
-16.42
-14.72
-9.36
-6.6
5.14
-3.6
1.18
7.44 8.88 8.46 8.78
8.21
6.71 7.51
6.44
-20.00
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14
GrowthTrend:GDP,Oil&Non-OilSectors
GDP Growth (%) Oil Sector Growth (%)
Proposal of the Senate Committee on Appropriation
Agricultur
e, 23.86%
Industry,
22.66%
Services,
53.48%
Contributionto GDP

3. 204.10
140
150
160
170
180
190
200
210
5-Jan-15
9-Jan-15
13-Jan-15
17-Jan-15
21-Jan-15
25-Jan-15
29-Jan-15
2-Feb-15
6-Feb-15
10-Feb-15
14-Feb-15
18-Feb-15
22-Feb-15
26-Feb-15
CBN ($/N) NIGERIAN INTERBANK ($/N)
Inflation
The headline inflation rate in January increased to 8.2% from 8.0% in December
2014. The rise in the Consumer Price Index (CPI) was driven by a six-month high
spike in core inflation at 6.8% as against 6.2% in December, even as food inflation
remained unchanged from the 9.2% recorded in December. The increase is attribut-
able to the pass through effect of the first devaluation of the Naira in November
2014 and persistent volatility in the forex market. The decline in international food
prices however helped to moderate the aggregate price increase. The rate of infla-
tion is expected to remain elevated in the near term, especially in view of the sec-
ond adjustment to the Naira exchange rate value and continued volatility in the
forex market as electioneering progresses.
Money Market
Interest rates increased during the month, reflecting the impact of the liquidity tight-
ening measures undertaken by the monetary authorities. In this regard, overnight
rate grew to 93.13% from 9.25%, while 30, 60, and 90days grew from 13.73%,
15.09% and 16.10% to 15.4%, 16.29% and 17.13%, respectively. The liquidity squeeze
was further exacerbated by the increased outflow of funds as cover for foreign ex-
change. The delays in the passage of the 2015 budget will most likely affect govern-
ment spending and impact liquidity in the system, though increased spending for
political activities will likely mitigate this impact.
Nigerian Export-Import Bank
March 2015
Economic & Trade Trends
Manufacturing , Agriculture, Solid Minerals and Services
Sources:: FMDQ, NEXIM SPD
Foreign Exchange Market
Amid higher demand, lower oil revenue and depleting oil reserves, the Central Bank of Nigeria, on 18 February, closed the official
Dutch Auction System (DAS) window, raising the official exchange rate by 18% to N198/$ from N168/$. By this move, the Naira has
lost 25% since the first devaluation in November 2014. According to the CBN, this was necessitated by the widening margin between
the interbank and the rDAS window rates which had engendered undesirable practices including round-tripping, speculative demand,
rent-seeking, spurious demand, and inefficient use of scarce foreign exchange resources by economic agents. Prior to the closure of
the rDAS window, the Naira had significantly depreciated at the interbank and BDC markets to as low as N205/$ and N211/$ respec-
tively by February 11, widening the difference against the official exchange rate by about N37/$. However, following the closure of
the rDAS window, the Naira has stabilized around N200/$ and N215/$ at the Interbank market and BDC markets. As a result, the
moderation in Nigeria’s foreign reserves continued in the month, dropping by 9% from $34.28 billion on January 31 to $31.36 billion
on February 27. The devaluation of the exchange rate has a positive effect in that it raises the value on export revenue and discour-
ages arbitrary importation of goods, however, its negative implication is that it may lead to higher costs, especially of foreign inputs
and raw materials which may put a lid on consumer expenditure. In addition, this may also impact foreign currency positions of finan-
cial institutions. We expect currency pressure to persist until after elections.
Inflation Trends
Contact: strategy@neximbank.com
65.96
93.13
10.92
0.0
20.0
40.0
60.0
80.0
100.0
31-Dec-14
3-Jan-15
6-Jan-15
9-Jan-15
12-Jan-15
15-Jan-15
18-Jan-15
21-Jan-15
24-Jan-15
27-Jan-15
30-Jan-15
2-Feb-15
5-Feb-15
8-Feb-15
11-Feb-15
14-Feb-15
17-Feb-15
20-Feb-15
23-Feb-15
26-Feb-15
%
O/N 30 DAYS 90 DAYS 180 DAYS
Nigeria Inter-Bank Offered Rate
The Domestic Economy
31.36
198
110.5
160.5
210.5
25.0
29.0
33.0
37.0
31-Dec-14
03-Jan-15
06-Jan-15
09-Jan-15
12-Jan-15
15-Jan-15
18-Jan-15
21-Jan-15
24-Jan-15
27-Jan-15
30-Jan-15
02-Feb-15
05-Feb-15
08-Feb-15
11-Feb-15
14-Feb-15
17-Feb-15
20-Feb-15
23-Feb-15
26-Feb-15
$'Bn
Reserves Official Rate
Foreign Exchange Vs Reserves Movement
7.7 7.8 7.9 8 8.2 8.3 8.5 8.3 8.1 7.9 8 8.2
9.2 9.3 9.4 9.7 9.8 9.9 10 9.7
9.3 9.1 9.2 9.2
7.2
6.8
7.5 7.7
8.1
7.1
6.3 6.3 6.3 6.3 6.2
6.8
5.0
6.0
7.0
8.0
9.0
10.0
11.0
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
%
Foreign Exchange Market Trend

4. Disclaimer
Whilst reasonable care has been taken in preparing this document to ensure the accuracy of facts stated herein and
that the information, estimates and opinions also contained herein are objective, reasonable and fair, no responsi-
bility or liability is accepted either by NEXIM or any of its employees for any error of fact or opinion expressed
herein. No reliance should be placed on the accuracy, fairness or completeness of the information contained in
this report as it is based on secondary information. All information and opinions set forth in this document con-
stitute the analyst(s) position as at the date of the report and may not necessarily be so after the report date as they
are subject to change without notice.
This document is for information purposes only and for private circulation. No portion of this document may be
reprinted, sold or redistributed without the written consent of NEXIM BANK. The report is available primarily
electronically.
March 2015
Contact: strategy@neximbank.com