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Zawya
03-03-2025
- Business
- Zawya
Nigeria: Short-term interest rates to trend low on over $2bln expected liquidity inflows
Nigeria's financial markets are poised for a significant influx of liquidity, with over N3 trillion expected to flood the system in the short term. This substantial liquidity injection is anticipated to have a profound impact on short-term interest rates, which are likely to trend lower as a result. The impending liquidity surge, driven by factors such as maturing treasury bills and bond repayments, is expected to increase the amount of money available for lending, thereby exerting downward pressure on short-term interest rates. Dealers from Cowry Assets Management Limited in a note to investors observed that given these conditions, short-term interest rates are likely to remain under pressure, with investors closely monitoring developments in the fixed-income space for strategic positioning. 'Looking ahead, we anticipate a further decline in money market rates in the coming week as liquidity inflows continue to shape market dynamics. Another tranche of N1.7 trillion from FAAC allocations is expected to permeate the financial system, sustaining the current liquidity uptrend. Additionally, maturities worth N50 billion from Open Market Operation (OMO) bills and N1.27 trillion from Treasury Bills will enter the market, further bolstering liquidity levels, ' Cowry Assets Management stated. Meanwhile, the Nigerian money market witnessed a significant increase in liquidity last week following a substantial inflow of N1.7 trillion from the Federation Account Allocation Committee (FAAC). This excess liquidity led to a sharp decline in the Nigerian Interbank Offered Rate (NIBOR) across all tenors, reflecting reduced funding pressures among financial institutions. Industry participants observed that the Overnight NIBOR saw the steepest drop, plunging by 438 basis points to settle at 28.54 percent. Similarly, the one-month, three-month, and six-month NIBOR rates declined by 17 basis points, 36 basis points, and 84 basis points, respectively, highlighting the impact of the liquidity surplus in the interbank market. The decline in market rates according to dealers, was also evident in the broader money market, as both the Overnight (OVN) rate and the Open Buy Back (OPR) rate moderated, closing the week at 26.75 percent and 27.33 percent, respectively. This occurred despite the Debt Management Office (DMO) settling N910.4 billion worth of Federal Government bonds, which temporarily absorbed some liquidity from the financial system. In the Nigerian Treasury Bills (NTB) market, the Nigerian Interbank Treasury Bills True Yield (NITTY) declined across most tenors,exceptf the one-month NITTY, which rose by 21 basis points. This suggests that investors are shifting focus towards short-term securities, likely in response to prevailing money market conditions and expectations of further liquidity inflows. Meanwhile, the three-month, six-month, and twelve-month NITTY rates trended lower as market participants exited the secondary market in anticipation of an upcoming robust Primary Market Auction (PMA) for Treasury Bills this week. The secondary Treasury Bills market saw a moderate bullish sentiment, as the average yield declined by 35 basis points week-on-week. This downward movement in yields was largely driven by increased demand across various maturities, as investors sought to lock in favourable rates ahead of the expected liquidity surge. Copyright © 2022 Nigerian Tribune Provided by SyndiGate Media Inc. (
Zawya
10-02-2025
- Business
- Zawya
IMF warns Nigeria's declining GDP per capita signals shrinking prosperity
Despite Nigeria's economic growth, a troubling trend has emerged—Gross Domestic Product (GDP) per capita is steadily declining, highlighting the country's shrinking prosperity. The International Monetary Fund (IMF) has raised concerns that this persistent downturn reflects worsening economic conditions, even as Nigeria improves in overall GDP rankings. As the country struggles to recover from post-pandemic challenges, the IMF's latest data underscores the urgent need for policymakers to adopt strategies that ensure sustainable and inclusive growth. GDP per capita, a key measure of living standards, has continued to fall, eroding the purchasing power and economic well-being of Nigerians. According to the latest IMF figures, Nigeria's GDP per capita has dropped to $835.49 in 2025, marking its lowest level in recorded history. The decline is largely driven by the depreciation of the naira and rapid population growth, both of which have significantly weakened economic prosperity. Over the past decade, Nigeria's GDP per capita has plummeted by 74.08 percent, falling from $3,222.7 in 2014 to its current level. Analysts at Cowry Assets Management Limited have expressed concern that economic growth continues to lag behind population expansion. 'If current trends persist, Nigeria's economic progress will remain sluggish, exacerbating poverty levels and reducing the quality of life for millions,' they warned. Nigeria's GDP per capita remains one of the lowest in Africa. Comparative data for 2025 places South Africa at $6,517.1, Morocco at $4,470.6, Tunisia at $4,396.2, Egypt at $3,160.1, Ghana at $2,189.3, and Kenya at $2,186.6. These figures indicate that Nigeria is among the least economically prosperous nations in Sub-Saharan Africa, falling within the lower GDP per capita bracket of $500 to $2,500. In a broader global context, Nigeria is also trailing behind other emerging economies. The average GDP per capita across developing nations stood at $17,060 in 2024, with projections showing an increase to $17,901 in 2025, driven by an annual real GDP growth rate of 4.2 percent. Despite the bleak outlook, the IMF projects a gradual improvement in Nigeria's GDP per capita, expecting it to rise to $940.2 by 2026, $1,001.3 by 2029, and $1,047.08 by 2030. However, this slow recovery suggests that Nigeria will only cross the $1,000 threshold by 2028, far behind many of its regional and global counterparts. To reverse this trend, experts emphasize the need for structural economic reforms, improved productivity, and increased investment in key sectors. Without urgent policy changes, Nigeria risks continued economic stagnation, widening inequality, and further declines in living standards for millions of its citizens. Copyright © 2022 Nigerian Tribune Provided by SyndiGate Media Inc. (
