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Summary: IN THIS SPECIAL REPORT, African Banker looks at how the Central Bank of Nigeria over the past five years has responded to the global financial and economic crisis to build the framework for growth in Nigeria. The bank has sanitised the financial services industry, ensuring that it plays a pivotal and participatory role in Nigeria's economic growth, reaching out to the unbanked and often-overlooked sectors such as women, farmers and SMEs. The Central Bank's policies have also led to increased stability in the country and, alongside those of the Ministry of Finance, this has resulted in Nigeria posting strong fundamentals, such as a stable exchange rate and lower inflation, all of which has helped Nigeria access the global capital markets and made its rising stock exchange one of the world's top ten performing markets in 2013. The report that follows looks at some of the key milestones from the last five years.

The financial crisis of 2008-2009, which turned into a global economic downturn, continues to resonate across international banking systems to this day. Central banks and national governments were forced to make massive interventions, challenging received wisdoms and orthodoxies about monetary policy and supervision.

Emerging market central banks faced the difficult challenge of managing the complex inflows and outflows of capital that came with global financial turmoil and balancing the need to improve supervision and regulation with the desire to promote growth and investment.

As a large, export-driven but import-dependent economy with an undercapitalised banking sector, Nigeria's financial system and wider economy also experienced those challenges. Over the course of the past five years, the Central Bank of Nigeria took on an expanded role in oversight, regulation and thought leadership, using all of the supervisory and monetary policy tools at its disposal to strengthen the Nigerian financial system and economy. The exchange rate has been stable, which has helped reduce inflation to single digit. The banking sector is much stronger and a set of policies are turning it into a key participant in the country's economic growth.

Key Economic Indicators

Real GDP % YOY (2013) 6.8

Nominal GDP $*

C/A balance % of GDP 5.2

Gross Reserves (YE '13) $*

CPI % YOY (Dec. 2013) 8

Public Debt % of GDP 20**

Govt. Budget balance -1.9

Exports (2012) $108 bn

FDI (2012) $7bn

Nigeria - Country facts

Area 923,768 sq km

Population 170m

GDP $262.6bn

GDP after rebasing $432bn (65% increase)

GDP per capita $1,700

GDP per capita after rebasing (estimated) $2,400

Predicted GDP growth in 2014 6.9% (UNECA)

Household consumption expenditure $283bn

Stock market capitalisation $82bn

Benchmark interest rate 12%

Rate of inflation 8%

Inflation averaged 10.41% from 2006 until 2013

Consumer inflation 2014 estimated at between 6 and 9%

MSMEs - 8m, employing 42.4m people and contributing 46.5% of nominal GDP (2012). An estimated 80% are excluded from the financial market

The Central Bank of Nigeria has taken on an expanded role in oversight, regulation and thought leadership

Banking Sector Reform

Number of bank branches

3,535 in 2005

5,810 in 2011

Number of Banks

Key Achievements

* Maintaining a stable exchange rate;

* Containing inf lation;

* Sustaining high economic growth rates;

* Recapitalising and restoring the banking sector;

* Expanding financial access to unbanked populations;

* Creating a new culture of corporate governance in the banking industry; and

* Strengthening the institution of the CBN.

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Publication:African Banker
Geographic Code:6NIGR
Date:Feb 17, 2014
Previous Article:BANKING SECURITY - Will NIGERIA get it right?

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