In Nigeria, the Federation Accounts Allocation Committee (FAAC) disbursed NGN1.10 trillion to the three tiers of government in September, representing a 13.9% month-on-month increase from August. This disbursement accounts for 74.1% of the total revenue generated in the month, with the remaining balance allocated to various purposes. Notably, funds from Value Added Tax (VAT), Electronic Money Transfer Levy (EMTL), and Import and Export Duties contributed significantly to the revenue generated. The liberalization of the foreign exchange market is expected to continue supporting oil revenue in naira terms, while non-oil revenue is expected to grow due to improved economic activities and the impact of the 2022 Finance Act.
In the Investors & Exporters Window (IEW), total inflows reached a three-month high of USD1.31 billion in September, primarily driven by local inflows. Foreign inflows, however, remained underwhelming, indicating cautiousness among foreign investors despite currency depreciation. FX liquidity conditions are expected to remain fragile in the near term, with weak foreign inflows as investors adopt a wait-and-see approach.
Capital Markets Show Mixed Performance
Nigeria’s equities market rebounded after a three-week bearish trend, with the All-Share index advancing by 0.1% week-on-week. Gains in select stocks offset losses in others, resulting in a Year-to-Date return of +29.6%. Trading activity increased, with total trading volume and value growing significantly. Despite the short-term rebound, caution is advised in the equities market due to a lack of significant positive catalysts. The macroeconomic environment remains challenging for corporate earnings.
Money Market and Fixed Income
In the money market, the overnight (OVN) rate declined to 1.7% due to ample system liquidity resulting from FAAC allocations and other factors. System liquidity closed with a net long position of NGN804.77 billion. The OVN rate is expected to remain low in the coming week due to ample liquidity and the absence of significant outflows.
