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The Central Bank of
Nigeria (CBN) insists that despite claims to the contrary, the Nigerian
economy is actually growing in real terms.

Lamido Sanusi, the
CBN Governor, said in Benin, Edo State, last week that official figures
from the National Bureau of Statistics which tally with the Central
Bank data suggests that the Nigerian economy is showing signs of
recovery. Mr Sanusi added that inflation rate which stood at 12.5 per
cent in April dropped to 10.3 per cent in June.

Cheering statistics

“When I became
governor in June last year, the rate of inflation was 15 per cent. End
of last June it was down to 10.3 per cent. When I became governor, the
OBB (open buy back) rate was eight per cent while the overnight rate
was 22 per cent. Now there is a convergence between the OBB and
overnight rate and that has been so for almost a year now,” he said.
The OBB is the rate at which firms trade treasury bills while the
overnight rate is the cost of unsecured funds.

Gross Domestic
Product (GDP), which is the market value of all final goods and
services officially made within the borders of a country in a year and
is a measure of standard of living, is projected to grow by 7.53 per
cent, with the highest growth in the fourth quarter of 2010. The
governor said the current value of the naira was an indication of
economic stability. “When I became governor, the official rate for the
naira was N145 while black market was around N189/N192. We have closed
the differential to less than two per cent and it has been like that
for over a year. The stock market had lost over 70 per cent before I
came in as governor. Between January and June it has regained almost 30
per cent,” he said.

Foreign perception

A financial market
dealer, who spoke on the condition of anonymity, said one indication
that the economy was still in the woods can be deduced from the
perception of foreign investors of the Nigerian economy. “The real
issue is that since the end of 2008, foreign portfolio investors have
lost interest in Nigerian assets in addition to drop in interest rate
on government bonds.” He added that forex demand is seasonal usually
peaking at April and May when multinationals and other expatriate
workers are remitting dividends to their home countries. “Also there
was much speculation around that period due to dropping foreign
reserves, fluctuating oil prices. People bought foreign exchange sooner
rather than later.” He noted that now that the naira was stabilizing,
demand will expectedly drop. Trading from the Wholesale Dutch Auction
System (WDAS) stands at between $21 and $23 billion annualized same as
last year. So, much has not changed.”

He added that the cyclical movement in foreign exchange demand may not necessarily point to an economy that is under pressure.

Uju Ogubunka, registrar and chief executive officer of the Chartered
Institute of Bankers of Nigeria (CIBN) said the banking industry which
is supposed to drive the economy has been floundering prior to the CBN
intervention last year. “Confidence has really taken a flight from the
industry,” he said adding that the effort by the CBN to reposition the
sector would augur well for the economy.