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CBN Raises Monetary Policy Rate to 24.75%

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The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has announced an increase in the Monetary Policy Rate (MPR) from 22.75 percent to 24.75 percent. Olayemi Cardoso, the Governor of the CBN, disclosed this adjustment during a press conference held on Tuesday at the committee’s 294th meeting in Abuja.

The MPR serves as the fundamental interest rate within an economy, with all other interest rates dependent on it. This rate hike marks the second monetary policy decision under Cardoso’s leadership since assuming office on September 26, 2023.

Cardoso explained that the committee opted to raise the MPR by 200 basis points to 24.75 percent while maintaining the asymmetric corridor at +100 basis points and -300 basis points around the MPR. Additionally, the committee retained the Cash Reserve Ratio (CRR) at 45 percent and the liquidity rate at 30 percent.

This recent adjustment underscores the CBN’s assertive approach to monetary policy tightening aimed at addressing inflation concerns. Cardoso highlighted that while managing inflation remains a key objective for the CBN, the bank is cognizant of the broader impacts of interest rate adjustments.

Cardoso further noted that the increase in interest rates has led to increased activity in the foreign exchange market, resulting in a reduction in the exchange rate and associated costs. He emphasized the importance of achieving a sustainable exchange rate level, which would require collaboration between monetary and fiscal policies.

The MPC also reviewed the banking system’s status and affirmed its safety, soundness, and stability. The committee urged the CBN to maintain vigilant oversight and ensure banks’ compliance with existing regulatory guidelines. Additionally, the committee recommended expedited action on bank recapitalization to bolster the system against potential risks in an increasingly globalized environment.

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IMF Predicts 26.3% Drop in Nigeria’s Inflation by 2024

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The International Monetary Fund (IMF) has forecasted a significant drop in Nigeria’s inflation rate to 26.3% by 2024. This projection was part of the IMF’s revised Global Economic Outlook released earlier this week, which also predicted a 3.3% growth for Nigeria’s economy this year.

In its report, the IMF maintained the growth prospects for Sub-Saharan Africa (SSA) in 2024, with a slight upgrade attributed to Nigeria’s improved growth outlook, offsetting downward forecasts for other countries like Angola.

According to the IMF, Nigeria’s economy is expected to grow by 3.0% in 2025, a slight decline from its previous projection. The SSA region as a whole is forecasted to experience growth of 3.8% in 2024 and 4.0% in 2025, driven by the gradual improvement in supply issues and the easing of earlier weather shocks.

Additionally, the IMF noted a slight uptick in growth for advanced economies, with projections increasing from 1.6% in 2023 to 1.7% in 2024, and further to 1.8% in 2025.

However, Nigeria has been grappling with persistent inflationary pressures throughout the year. The country’s inflation rate rose from 29.90% in January to 33.2% in March, posing challenges to its economic stability despite the IMF’s optimistic long-term forecast.

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Volkswagen Invests $210 Million in South African Plant

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Volkswagen Group plans to inject $210 million into its South African manufacturing plant in anticipation of launching a new SUV brand by 2027. The investment aims to upgrade various facilities within the Eastern Cape-based plant to accommodate the production of a third model.

Martina Biene, managing director of the group’s Africa branch, emphasized aligning company objectives with the current automotive market landscape in Africa. He highlighted the ongoing demand for vehicles with internal combustion engines (ICEs) in the region despite the global shift towards electric vehicles.

The first phase of upgrades to the Volkswagen plant, known as the Kariega Plant, is set to commence by the end of 2024 during a scheduled plant shutdown. The development of the new SUV will be led by Volkswagen Brazil, with input from the Africa engineering team to adapt the vehicle to local requirements such as right-hand driving.

While the specific name of the new SUV remains undisclosed, Biene indicated that it would be marketed in African countries where Volkswagen has a presence. Additionally, Volkswagen plans to introduce its ID.4 test fleet in South Africa and Rwanda as part of its broader strategic initiatives.

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e-Payment Transactions Hit all-time High of N234.4trn in First Quarter 2024

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Electronic payment machines are becoming increasingly popular in Nigeria by 2024.

With the recently resolved cash scarcity issue, Nigerians have adapted to the use of POS for cash payments and withdrawals. This transaction increased to N234.4 trillion in the first quarter (Q1) of 2024 as more Nigerians went cashless during the period.

The Nigeria Inter-Bank Settlement System (NIBSS) reported an 89% increase in the value of Instant Payment (NIP) to N234.4 trillion from N123.9 trillion in Q1 2023.

From the beginning of this year to March, there has been a steady rise in the amount of payment transactions carried out via various banks and fintech electronic channels in the country

Though the NIP transaction value rose to N72.1 trillion in January from N71.9 trillion recorded in December 2023, the value of electronic payments increased further to N79.3 trillion in February and by March, the value of electronic transactions in the country had surged to an all-time high of N83 trillion.

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