The naira weakened modestly in the official market, closing at ₦1,353.5/$, compared to ₦1,348/$ in the previous session, as investors repositioned ahead of the 304th Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria.

Intraday trading reflected cautious sentiment, with the currency moving within a tight band before settling near its session average. The mild depreciation underscores one central theme: markets are no longer just waiting to see whether policy will change; but how.

With inflation trending downward and reserves strengthening, attention has shifted to whether the CBN will initiate a cautious easing cycle, potentially with a 50-basis point cut.

This decision carries implications across three critical dimensions: FX stability, fixed income positioning, and macro signaling credibility.

 

1: FX Stability: Can the Naira Withstand a Cut?

Nigeria’s external reserves have climbed to $48.77 billion, providing a solid buffer against speculative pressure. FX volatility has moderated in recent months, and the parallel market premium has narrowed relative to prior stress episodes.

From an exchange rate perspective, a 50bps cut:

• Would still leave real rates deeply positive.
• Maintains Nigeria’s carry attractiveness relative to peers.
• Signals confidence in reserve adequacy.

The key question is whether rate differentials remain sufficient to anchor portfolio flows. At 27%, Nigeria’s benchmark rate is already extremely restrictive. A move to 26.50% would not meaningfully erode yield appeal.

Short-term reaction could see mild testing of the ₦1,360–₦1,380/$ range, but sustained instability would require a liquidity shock, not merely a marginal rate adjustment.

In this context, FX stability is increasingly a function of reserve management and supply-side intervention, rather than rate levels alone.

 

 

2: Fixed Income: The Duration Trade

Bond markets are highly sensitive to policy pivots. A 50bps cut would:

• Compress short-end yields.
• Encourage duration extension.
• Strengthen appetite for government securities.

With inflation easing, real yields remain strongly positive even after a modest cut. Institutional investors, pension funds, asset managers, banks, are likely to rotate toward longer maturities in anticipation of a gradual easing cycle.

If the MPC signals further normalization ahead, the yield curve could bull-steepen, producing capital gains for long-duration holders.

This is where positioning becomes strategic rather than reactive.

 

3: Macro Signaling: The Credibility Question

Perhaps the most important dimension is narrative control.

Inflation has declined for eleven consecutive months to 15.1%, and maintaining a 27% policy rate indefinitely risks appearing excessively restrictive relative to underlying price dynamics.

A calibrated 50bps reduction would:

• Acknowledge progress on disinflation.
• Preserve positive real rates.
• Demonstrate policy flexibility without abandoning discipline.

Conversely, holding rates may reinforce anti-inflation credibility but risk signaling policy inertia despite improving data.

The MPC must balance two competing perceptions:

• Move too early, and risk FX volatility.
• Move too late, and constrain growth unnecessarily.

 

 

Base Case Outlook

While a hold remains plausible, a 50bps cut to 26.50% is increasingly defensible given:

• Strengthening external buffers.
• Sustained disinflation.
• Tight liquidity conditions are already embedded via high CRR.
• Elevated real interest rates.

Policy Forecast:

Instrument	Current	Expected
MPR	27.00%	26.5% (50bps cut_
CRR	45.00%	Hold
Liquidity Ratio	30.00%	Hold

 

This would represent a calibration, not a pivot.

 

Strategic Implications

If the CBN cuts:

• FX reaction is likely mild and contained.
• Fixed income market rallies.
• Equities respond positively to lower funding expectations.
• Narrative shifts toward gradual normalization.

If the CBN holds:

• Naira’s stability will be reinforced in the short term.
• Bond market reprices slightly higher.
• Easing expectations shift to mid-2026.

 

Conclusion

The 304th MPC meeting represents more than a rate decision, it is a signal of how confident the Central Bank of Nigeria is in the durability of macro stability.

A 50bps cut would not weaken policy credibility. It would instead communicate that the tightening cycle has done its work, and that normalization can begin carefully, under the cover of rising reserves and falling inflation.

Markets are watching not just the rate, but the message behind it.

By Temitayo Gbenro

Capital importation constitutes a critical component of Nigeria’s balance of payments framework. In an open emerging economy characterized by structural FX demand pressures, a narrow export base, and episodic external shocks, foreign capital inflows serve as both a stabilizing instrument and a source of macroeconomic vulnerability.

Within Nigeria’s external sector, capital inflows broadly take three dominant forms:

1. Foreign Portfolio Investment (FPI)
2. Foreign Direct Investment (FDI)
3. Diaspora Remittances

Each category exhibits distinct risk profiles, transmission mechanisms, and developmental multipliers. Their macroeconomic implications differ materially.

1. Foreign Portfolio Investment (FPI)

Foreign Portfolio Investment refers to cross-border investments in financial instruments without management control. In Nigeria, this typically includes:

• Federal Government bonds
• Treasury Bills and OMO instruments
• Listed equities on the Nigerian Exchange
• Money market instruments

Macroeconomic Transmission Mechanism

FPI primarily influences:

• Foreign exchange liquidity
• Yield curve dynamics
• Sovereign borrowing costs
• Capital market depth
• Monetary policy effectiveness

In high-interest-rate environments, such as periods of elevated Monetary Policy Rate (MPR), Nigeria becomes attractive to yield-seeking global capital. This creates short-term FX inflows, strengthens reserves, and temporarily stabilizes the naira.

Structural Limitations

However, FPI is inherently pro-cyclical and highly sensitive to:

• Global risk appetite
• U.S. Federal Reserve policy stance
• Commodity price volatility
• Domestic FX convertibility risks

Sudden reversals (“capital flight”) can:

• Exert downward pressure on the exchange rate
• Deplete reserves
• Force aggressive monetary tightening
• Increase sovereign refinancing risks

FPI enhances liquidity but does not expand productive capacity. Its developmental elasticity is limited.

 

2. Foreign Direct Investment (FDI)

 

Foreign Direct Investment involves long-term capital committed to physical assets or controlling stakes in enterprises. Unlike portfolio flows, FDI reflects confidence in structural fundamentals rather than short-term yield arbitrage.

Developmental Channels

FDI contributes to:

• Capital formation (Gross Fixed Capital Formation)
• Technology transfer and productivity gains
• Human capital development
• Export diversification
• Employment generation
• Industrial cluster development

For Nigeria, sectoral distribution is critical. FDI concentrated in extractive industries (e.g., crude oil) has historically produced enclave growth with limited spillovers. In contrast, FDI in:

• Agro-processing
• Manufacturing
• Renewable energy
• Infrastructure
• Digital services

generates broader value-chain multipliers.

Stability Profile

FDI is relatively inelastic to short-term shocks because it involves sunk costs. It is therefore:

• Less volatile
• More developmentally accretive
• Structurally transformative

In long-term growth modeling, FDI is positively correlated with total factor productivity (TFP) improvements.

 

 

 

 

 

 

 

3. Diaspora Remittances

Remittances are unilateral transfers from Nigerians abroad to domestic households. Nigeria remains one of Africa’s largest recipients of diaspora flows.

Macroeconomic Effects

Remittances influence:

• Household consumption smoothing
• Poverty reduction
• FX supply augmentation
• Informal sector capital formation
• Education and healthcare spending

Unlike FPI, remittances are counter-cyclical: they often increase during domestic economic stress.

However, their macroeconomic multiplier depends on utilization patterns. If predominantly consumption-driven without corresponding domestic supply expansion, remittances may:

• Contribute to inflationary pressures
• Increase import demand
• Widen trade imbalances

They are socially stabilizing but not inherently industrializing.

 

Comparative Economic Characteristics

Variable	FPI	FDI	Remittances
Volatility	High	Low	Low–Moderate
Time Horizon	Short	Long	Continuous
FX Impact	Immediate, reversible	Stable	Stable
Productive Capacity	Minimal	High	Indirect
Employment Impact	Limited	Direct	Indirect
Policy Sensitivity	High	Moderate	Low

 

From a macro-structural standpoint, the optimal capital structure for Nigeria would prioritize FDI and stable remittance flows while minimizing excessive dependence on speculative portfolio capital.

 

Dutch Disease Risk

Conceptual Framework

Dutch Disease describes a structural macroeconomic distortion whereby large foreign currency inflows, typically from natural resource exports or capital surges, lead to real exchange rate appreciation, thereby undermining the competitiveness of non-resource tradable sectors.

The term originated from the Netherlands’ post-1960s natural gas boom but is applicable to resource-dependent economies such as Nigeria.

Mechanism of Transmission

The process unfolds in three stages:

1. Foreign Currency Inflow Surge

This may arise from:

• Oil export revenues
• Large FDI in extractive sectors
• Significant FPI inflows
• External borrowing

2. Real Exchange Rate Appreciation

Increased FX supply strengthens the domestic currency in real terms. This can occur via:

• Nominal appreciation
• Domestic inflation exceeding trading partners
• Increased domestic demand

3. Sectoral Resource Reallocation

Capital and labor migrate toward:

• Non-tradable sectors (construction, services, real estate)
• Resource extraction sectors

Meanwhile:

• Manufacturing
• Agriculture
• Export-oriented SMEs

lose competitiveness due to higher production costs relative to global peers.

 

Nigerian Context

Nigeria’s heavy dependence on crude oil exports makes it structurally susceptible to Dutch Disease dynamics.

When oil prices are elevated:

• FX inflows rise
• Government spending expands
• Domestic liquidity increases
• Real exchange rate strengthens

Consequently:

• Import dependency increases
• Local manufacturing weakens
• Industrial capacity utilization declines
• Non-oil exports stagnate

This dynamic entrenches mono-product dependence.

Conversely, during oil price downturns:

• FX inflows collapse
• Currency depreciates sharply
• Inflation accelerates
• Fiscal stress intensifies

The economy experiences asymmetric volatility: boom-driven distortion followed by bust-driven instability.

 

Capital Importation and Dutch Disease

Large portfolio inflows can replicate Dutch Disease effects even outside commodity booms. For example:

• Sustained FPI inflows strengthen the naira artificially.
• Domestic interest rates remain elevated to attract capital.
• Manufacturing suffers from high cost of capital and currency misalignment.

Similarly, remittance surges without supply-side expansion can intensify import consumption and widen current account pressures.

Thus, capital inflows — if not sterilized or productively allocated, may create exchange rate misalignment and structural de-industrialization.

 

Policy Mitigation Strategies

To mitigate Dutch Disease risks, Nigeria must:

1. Maintain exchange rate flexibility to avoid prolonged misalignment.
2. Channel inflows into productive capital formation rather than recurrent expenditure.
3. Strengthen sovereign wealth stabilization mechanisms.
4. Deepen industrial policy targeting export diversification.
5. Enhance domestic savings mobilization to reduce external dependence.

 

Conclusion

Capital importation is not inherently growth-inducing. Its developmental outcome depends on:

• Composition (FPI vs FDI vs Remittances)
• Sectoral allocation
• Exchange rate regime
• Institutional capacity
• Fiscal discipline

For Nigeria, sustainable economic transformation requires a strategic pivot from volatile financial inflows toward productivity-enhancing investment.

Absent structural reforms, capital inflows may temporarily strengthen macro indicators while simultaneously deepening long-run fragility.

The central macroeconomic imperative is therefore compositional optimization, attracting capital that builds productive capacity rather than capital that merely circulates within financial markets.

 

Written By,

Temitayo Gbenro,

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) held its 303rd meeting on November 24 and 25, 2025. The Committee reviewed key developments in the global and domestic economies, including the risks to the outlook. All twelve (12) members of the Committee were in attendance.

Decision of the MPC

The Committee decided, by a majority vote, to maintain the current monetary policy stance with an adjustment to the corridor as follows:

Retain the Monetary Policy Rate (MPR) at 27.0 per cent.

Adjust the Standing Facility corridor around the MPR to +50 / -450 basis points.

Retain the Cash Reserve Requirement (CRR) as follows:

Deposit Money Banks: 45.00%

Merchant Banks: 16.00%

Non-TSA public sector deposits: 75.00%

Keep the Liquidity Ratio unchanged at 30.00 per cent.

The Committee’s decision was underpinned by the need to sustain progress made so far toward achieving low and stable inflation. The MPC reaffirmed its commitment to a data-driven assessment of developments and outlook to guide future policy decisions.

MONETARY POLICY COMMUNIQUÉ NO. 160
Considerations

The Committee welcomed the continued deceleration in headline inflation (year-on-year) in October 2025, marking the 7th consecutive month of decline. This favourable development resulted from several factors, including sustained monetary policy tightening, stable exchange rate, increased capital inflows, and surplus current account balance. Relative stability in the price of Premium Motor Spirit (PMS) and improved food supply also supported the pace of disinflation. However, headline inflation remains high at double digits, requiring sustained efforts to moderate it further.

The Committee noted that the steady deceleration across headline, core, and food inflation in October 2025 suggests that the lagged impact of earlier tightening measures will continue in the near term. Thus, maintaining the current stance amidst global uncertainties would allow previous policy rate hikes to fully transmit to the real economy and help reduce prices.

Members highlighted the strong performance of the external sector, evidenced by the surplus current account balance and steady accretion to external reserves, which have supported exchange rate stability and moderated inflation. The MPC also commended the collaboration between fiscal and monetary authorities, which contributed to the recent upgrade of Nigeria’s sovereign credit rating by major rating agencies and the delisting from the FATF grey list. These improvements are expected to boost investor confidence and enhance capital flows.

The Committee noted the sustained resilience of the banking system, with most financial soundness indicators within regulatory thresholds. Members acknowledged substantial progress in the ongoing recapitalization programme, with sixteen (16) banks now fully compliant with revised capital requirements. The Committee urged the Bank to ensure successful implementation and conclusion of the programme.

Price and Other Domestic Developments

Headline inflation (year-on-year) declined to 16.05% in October 2025 from 18.02% in September, driven by moderations in both food and core inflation.

Food inflation fell sharply to 13.12% in October 2025 from 16.87% in September, supported by improved domestic food supply, stable exchange rate, and base effects.

Core inflation declined to 18.69% in October 2025 from 19.53% in September, largely due to a decrease in the cost of furnishing and household maintenance.

Real Gross Domestic Product (GDP) growth remained positive, with 4.23% year-on-year growth in Q2 2025, compared with 3.13% in Q1 2025. The Purchasing Manager’s Index (PMI) rose significantly to 56.4 points in November 2025—the highest in five years—indicating improved growth prospects for Q3 and Q4 2025.

Gross external reserves increased by 9.19%, rising to US$46.70 billion as of November 14, 2025, from US$42.77 billion at end-September 2025, providing 10.3 months of import cover.

Global Developments

Global output is projected to recover in the near to medium term, supported by improved trade negotiations, accommodative monetary policy in Advanced Economies, and easing geopolitical tensions. However, risks remain, including rising protectionism, geoeconomic fragmentation, and potential renewed trade tensions between the United States and major trading partners.

Global inflation is expected to continue its downward trajectory through 2026 due to past monetary tightening, improved supply chains, and softening commodity prices, though it is projected to remain above pre-pandemic levels.

Outlook

The MPC forecasts sustained disinflation in the near term, driven by the lagged impact of previous monetary tightening and continued stability in the foreign exchange market. Ongoing seasonal harvests are expected to boost local food supply and further moderate food prices.

The Committee reaffirmed its commitment to an evidence-based policy approach to achieve price and financial system stability.

The Central Bank of Nigeria (CBN) will, on Wednesday, October 22, 2025, conduct its Treasury Bills (T-Bills) Primary Market Auction (PMA), where a total of N650 billion worth of maturing bills will be rolled over.

The maturing bills, being reissued on behalf of the Debt Management Office (DMO), will be offered across three maturities:

N100 billion for the 91-day tenor,

N100 billion for the 182-day paper, and

N450 billion for the 364-day instrument.

This reissuance forms part of the government’s regular short-term borrowing programme aimed at managing liquidity in the financial system.

Bidding Guidelines and Participation Rules

According to the CBN, the sale will be conducted via a Dutch auction—a competitive bidding process in which investors submit their preferred interest rates, and the final stop rate is determined by overall demand and market dynamics.

By rolling over maturing bills, the government is not raising new debt, but rather refinancing existing obligations.

The CBN further stated that authorized Money Market Dealers are to submit bids electronically through the CBN S4 Web Interface between 8:00 a.m. and 11:00 a.m. on Wednesday, October 22, 2025.

Each bid must:

Be in multiples of ₦1,000, and

Have a minimum investment of ₦50,001,000.

Dealers are permitted to place bids on behalf of non-dealer clients—including corporates, fund managers, and interested members of the public—thereby offering indirect access to retail investors seeking low-risk instruments.

The apex bank also clarified that dealers may submit multiple bids at different rates, allowing greater flexibility in investment choices.

Auction results will be announced on Wednesday, October 22, a day before settlement.
Successful bidders will receive allotment letters on Thursday, October 23, and must make payment for allotted amounts into their CBN accounts no later than 11:00 a.m. that same day.

The CBN reserves the right to reject or adjust bids based on prevailing market conditions.

Market Outlook and Economic Implications

Analysts expect the October auction to attract strong demand, particularly for the 364-day bills, which traditionally offer higher yields due to their longer duration.

The CBN’s decision to roll over rather than expand the issuance size reflects a cautious approach to liquidity management. By maintaining the N650 billion offer size, the Bank seeks to avoid excessive money supply that could worsen inflationary pressures, while still meeting short-term government financing needs.

Market watchers will closely monitor the stop rates—the final accepted interest rates for each tenor—as indicators of investor sentiment and the direction of short-term yields.

Given current market dynamics, analysts anticipate moderate downward adjustments in yields to reflect easing monetary policy and declining inflationary pressures.

Balancing Liquidity and Stability

The October 22 auction highlights the CBN’s continued reliance on Treasury Bills as a critical tool for liquidity control and fiscal support.

For investors, the exercise provides another opportunity to lock in steady, low-risk returns amid ongoing inflation and currency volatility.

As the auction date approaches, attention will center on the level of investor demand and the final stop rates at which the market clears.

Key Takeaways

Offer Breakdown: ₦100 billion (91-day), ₦100 billion (182-day), ₦450 billion (364-day).

Previous Stop Rates: 15.00% (91-day), 15.25% (182-day), 15.77% (364-day).

Significance: Auction outcome will help guide short-term interest rates and market sentiment into Q4 2025.

The Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) has reduced the Monetary Policy Rate (MPR) by 50 basis points, lowering it from 27.5 percent to 27 percent.

The decision was announced by CBN Governor, Olayemi Cardoso, during the post-MPC press briefing on Tuesday, following the Committee’s 302nd meeting in Abuja.

Alongside the MPR cut, the MPC narrowed the asymmetric corridor around the benchmark rate to +250 and -250 basis points, from the previous +500/-100 basis points.

This adjustment, according to the CBN, is intended to strengthen liquidity management and provide clearer signals to the financial markets.

Cardoso explained that the adjustment reflects the Committee’s cautious attempt to ease monetary conditions in response to signs of moderating inflation and improving macroeconomic fundamentals.

Other Policy Decisions

Cash Reserve Ratio (CRR): Retained at 45 percent for commercial banks; set at 16 percent for merchant banks.

Liquidity Ratio: Maintained at 30 percent.

The CBN said these measures were carefully balanced to sustain ongoing disinflation efforts while ensuring the banking sector has adequate liquidity to support credit expansion and economic growth.

Basis for CBN’s Decision
The MPC’s decisions come against the backdrop of fresh data from the National Bureau of Statistics (NBS), which showed that Nigeria’s inflation rate eased to 20.12 percent in August 2025, down from 21.88 percent in July.

Cardoso noted that while inflation remains elevated, recent declines suggest that previous rounds of monetary tightening are beginning to yield results. He stressed that the new measures would consolidate these gains without stifling economic growth.

According to the NBS, Nigeria’s economy grew by 4.23 percent in real terms in the second quarter of 2025, driven by strong performance in both oil and non-oil sectors. External reserves have also climbed close to $42 billion, providing additional buffers for monetary stability.

Analysts’ Reactions
Analysts have called on the CBN to adopt more flexible monetary policies that will stimulate credit flow into the economy, especially for small and medium enterprises (SMEs) and critical sectors.

Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), in a statement, urged the CBN to “calibrate CRR and MPR downward as inflation moderates to create a more enabling credit environment. Complement monetary tightening with supply-side measures to address structural inflation drivers.”

He stressed that while the CBN’s tight monetary posture aims to curb inflation, it has inadvertently limited access to affordable credit for businesses and households.

FG Allots N3.05 Billion in September 2025 FGN Savings Bonds

The Federal Government, through the Debt Management Office (DMO), has announced the successful allotment of the September 2025 FGN Savings Bonds, totaling N3.05 billion across the two-year and three-year tenors.

According to data published on the DMO’s website, the bonds opened for subscription on Monday, September 1, 2025, and closed on Friday, September 5, 2025, with settlement scheduled for September 10, 2025.

Coupon Payments

The DMO stated that coupon (interest) payments will be made quarterly—March 10, June 10, September 10, and December 10— directly to investors.

Allotments

Two-Year FGN Savings Bond (Due September 2027):

Interest rate: 15.541% per annum

Amount raised: N631.762 million

Subscriptions: 793 successful investors

Three-Year FGN Savings Bond (Due September 2028):

Interest rate: 16.541% per annum

Amount raised: N2.416 billion

Subscriptions: 1,246 successful investors

Comparison with August 2025 Auction

The September allotment was lower than the N3.3 billion recorded in August 2025.

In August, the government raised N573.31 million from the 2-year bond (maturing August 2027) and N2.74 billion from the 3-year bond (due August 2028).

The auction attracted 2,166 successful investors (892 for the 2-year and 1,274 for the 3-year).

Coupon rates stood at 14.401% for the 2-year bond and 15.401% for the 3-year bond.

Key Information for Investors

Bonds were issued at N1,000 per unit, with a minimum subscription of N5,000 and multiples of N1,000 thereafter, up to a maximum of N50 million.

Introduced in 2017, the FGN Savings Bond programme was designed to:

Deepen the domestic bond market.

Promote financial inclusion.

Provide retail investors access to secure, low-risk government securities.

Regulatory Recognition

The FGN Savings Bond:

Qualifies as an approved investment under the Trustee Investment Act.

Is recognized as a government security under CITA and PITA, making it eligible for tax exemption by pension funds and other institutional investors.

Is listed on the Nigerian Exchange Limited (NGX), allowing secondary market trading and enhancing liquidity.

Qualifies as a liquid asset for banks’ liquidity ratio calculations.

Over the years, the FGN Savings Bond has gained popularity among Nigerians seeking safe and predictable investment opportunities.

The Central Bank of Nigeria (CBN) is set to roll out fresh liquidity control measures through Open Market Operations (OMO) to absorb an estimated N784 billion inflows expected to hit the banking system this week.

A breakdown of the inflows shows that OMO maturities of N459.60 billion will enter the system today, while Nigerian Treasury Bill (NTB) maturities of N324.41 billion are due on Thursday. Banking system liquidity opened at N275.9 billion on September 1, 2025, up 10.4% from N249.8 billion on August 25, according to CBN data.

OMO as a Monetary Tool

OMO is one of the apex bank’s key instruments for regulating money supply in the financial system. By issuing OMO bills, the CBN borrows from banks and investors in exchange for short-term securities, thereby reducing excess liquidity and helping to ease inflationary pressures.

A Bank noted that the N480 billion NTB auction scheduled for Wednesday should further support liquidity mop-up. In the FGN bond market, yields are expected to moderate on the back of strong demand for newly issued on-the-run securities.

Recent Liquidity Trends

Last week, banking system liquidity rebounded to N1.40 trillion, reversing from a deficit of N609.43 billion in the previous week. This was supported by FAAC disbursements and OMO maturities of N758 billion, which outweighed the CBN’s liquidity absorption of N1.19 trillion through OMO sales.

As a result, interbank rates eased:

Open Repo Rate (OPR): down 240bps to 26.50%

Overnight (OVN): down 220bps to 26.95%

In the T-bills secondary market, trading was largely bearish. Average yield across the curve rose 23bps w/w to 22.18%, driven by NTBs where average yields expanded 50bps w/w to 18.88%. OMO bills, however, recorded a marginal decline, with average yields easing 3bps to 25.49%.

Rising OMO Sales

The CBN’s liquidity mop-up via OMO sales has surged by 79.2% year-on-year, supporting naira stability and curbing inflationary pressures.

Between January and August 22, 2025, the apex bank withdrew N13.35 trillion from the financial system, compared to N7.45 trillion in the same period of 2024. This represents a significant tightening push under Governor Olayemi Cardoso, especially compared with 2022, when OMO sales in the first eight months stood at just N710 billion.

Nigeria’s headline inflation has eased for the fourth consecutive month—from 22.22% in June to 21.88% in July 2025—underscoring the traction of the CBN’s disinflation drive.

Expert Insights

An economist opines that the CBN has deployed OMO as a central tool for liquidity management and price stability. He added that OMO has been strategically used to attract Foreign Portfolio Investments (FPIs), which has helped strengthen Naira stability, reduce money supply, and bolster disinflation.

“Collectively, these outcomes have bolstered investor confidence and reinforced Nigeria’s appeal as an investment destination,” he stated.

Another analyst highlighted that total OMO sales reached N13.5 trillion in 2024, a massive jump from N723 billion in 2023. Notably, during a single auction on November 11, 2024, the CBN

sold over N1.4 trillion in 365-day OMO bills, nearly double the entire sales volume of the previous year.

Outlook

One of the key drivers of the aggressive OMO issuances is the need to attract foreign portfolio inflows and strengthen FX liquidity. Elevated OMO yields, which peaked at 24.4% in September 2024, created favorable conditions for carry trades relative to U.S. Treasury yields.

According to a Bank, upward pressure on yields is expected in the near term as liquidity conditions tighten further with new OMO issuances.

The Debt Management Office (DMO) has announced the successful completion of its Federal Government of Nigeria (FGN) bond auction, with a total of N185.9 billion allotted across two re-opened bond offerings.

The auction, held on July 28, 2025, featured the reopening of two previously issued FGN bonds:

• N20 billion for the 19.30% FGN APR 2029 bond (five-year tenor).

• N60 billion for the 17.95% FGN JUN 2032 bond (seven-year maturity).

Settlement is scheduled for July 30, 2025.

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Auction Performance

According to data released by the DMO, subscriptions amounted to N39.08 billion for the 5-Year APR 2029 bond and N261.60 billion for the 7-Year JUN 2032 bond.

Out of these bids, the DMO allotted N13.43 billion for the APR 2029 bond and N172.50 billion for the JUN 2032 bond, totaling N185.93 billion, well above the initial offer size.

While the bonds retained their original coupon rates of 19.30% and 17.95%, they were allotted at marginal rates of 15.69% (5-Year bond) and 15.90% (7-Year bond). Analysts note this reflects a decline in yield expectations, suggesting investors anticipate easing inflation or a stable monetary policy outlook.

The reopening attracted 149 bids—40 for the 2029 maturity and 109 for the 2032 maturity. Of these, 74 bids were successful (15 for the 2029 bond, 59 for the 2032 bond).

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Comparison with June 2025 Auction

In June 2025, the total allotment was N100 billion, lower than July’s results.

• The 5-Year APR 2029 bond (coupon: 19.30%, maturity: April 17, 2029) attracted 30 bids worth N41.69 billion, but only two bids were successful, with an allotment of N1.05 billion.

• The 7-Year JUN 2032 bond (coupon: 17.95%, maturity: June 25, 2032) attracted 209 bids totaling N561.17 billion. Out of these, 41 bids were accepted, with an allotment of N98.95 billion.

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Regulatory Framework

The bond issuance was carried out under the Debt Management Office (Establishment) Act, 2003 and the Local Loans (Registered Stock and Securities) Act, CAP. L17, Laws of the Federation of Nigeria 2004.

The marginal rates for successful bids were:

• 17.75% for the 19.30% FGN APR 2029 (5-Year Reopening).

• 17.95% for the 17.95% FGN JUN 2032 (New, 7-Year).

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Investor Information

• Each bond unit is priced at N1,000, with a minimum subscription of N50,001,000. Additional subscriptions must be in multiples of N1,000.

• Though coupon rates are fixed, successful bidders pay a price determined by yield-to-maturity that clears the offered volume, plus accrued interest.

• Interest is payable semi-annually, ensuring regular income to bondholders.

• Principal repayment will be made in full at maturity via bullet repayment.

August 25, 2025 | Economy, GDP, Spotlight

Nigeria’s economy is projected to post stronger growth in Q2 2025, with analysts forecasting real GDP expansion between 3.2% and 3.9%.

This outlook would surpass both the 3.13% growth recorded in Q1 2025 and the performance in the same quarter of 2024, reflecting improved macroeconomic stability and rising non-oil output.

The optimism is supported by the recent GDP rebasing, relative exchange rate stability, and expansion across financial services, telecommunications, and industry.

The National Bureau of Statistics (NBS) is expected to release the official GDP report later this month.

Expert Projections

Experts forecast growth of 3.5%–3.7%, noting that the GDP rebasing has sharpened visibility into sectoral performance. The Purchasing Managers’ Index (PMI) averaged 52.2 points in Q2, up from 51.3 in Q1 2025 and 48.0 in Q2 2024, signaling stronger business activity.

“The Nigerian economy appears well positioned to record stronger growth in Q2 2025, outpacing both Q1 2025 and the corresponding period of 2024,

The projects growth between 3.2% and 3.9%, led by a robust non-oil sector expected to expand by 4.1%–4.6%, while the oil sector is projected to post a modest 2.0%–2.6% gain.

Oil sector performance remains subdued, with crude output steady at 1.48 mbpd in Q2 (vs. 1.47 mbpd in Q1) and weaker oil prices averaging $68.70/barrel compared to $73.66 in Q1. Analysts attribute this to reduced global demand following the so-called “Trump tariff effect.”

The non-oil economy, however, continues to gain traction.

Services remain the primary driver, boosted by bank recapitalisation in finance & insurance.

Telecommunications benefit from tariff liberalisation.

Industry is expected to edge up to 3.6% growth in Q2 from 3.4% in Q1, helped by easing inflation and FX stability.

Agriculture is likely to underperform, growing below its long-term 3% average due to persistent insecurity in key food-producing states such as Benue and Plateau.

They believe macroeconomic stability is central to the positive outlook.

“Considering the moderating inflation, stable currency, and increasing foreign reserves, GDP is expected to have grown in Q2 2025,” he said.

Key Drivers of Expected GDP Growth in Q2 2025

GDP rebasing: Enhances visibility of fast-growing sectors, particularly services and telecoms.

Macro stability: Inflation is easing, FX volatility has moderated, and reserves are improving.

Business activity: PMI of 52.2 reflects stronger private-sector output.

Non-oil momentum: Services, telecoms, and industry continue to expand, offsetting oil sector weakness.