Document Type

Annual Report

Publication Title

Central Bank of Nigeria Annual Report


In 2007, the Central Bank of Nigeria (CBN) faced significant challenges in monetary management due to statutory allocations to government tiers, autonomous foreign exchange inflows, and pre-election spending. These challenges were addressed through Open Market Operations (OMO), issuance of treasury securities, standing facilities, and foreign exchange swaps. The introduction of the monetary policy rate (MPR) in December 2006 moderated inter-bank rates, encouraged trading, and improved the transmission of monetary policy actions. The Bank intensified its non-regular management activities to ensure the Policy Support Instrument (PSI) target was met. The financial system at end-2007 comprised the CBN, the Nigeria Deposit Insurance Corporation (NDIC), the Securities and Exchange Commission (SEC), the National Insurance Commission (NAICOM), the National Pension Commission (PENCONI), 24 deposit money banks, 5 discount loans, 709 microfinance banks, Il2 finance companies, 703 Bureaux-de-Change, one stock exchange, one commodity exchange, 93 primary mortgage institutions, five development finance institutions, and 77 insurance companies. The foreign exchange market was relatively stable with further liberalization and deepening of the inter-bank market due to increased capital flows. The CBN implemented measures to maintain stability in the foreign exchange market, including participation of Bureaux de Change operators, non-accommodating monetary policy, prudent fiscal operations, and increased surveillance of authorized dealers. The stock of external reserves increased by 21.3% over 2006, supporting 5.6 months of imports. Under the Agricultural Credit Guarantee Scheme Fund (ACCSF), 43,233 loans were guaranteed in 2007, bringing the total loans guaranteed since the inception of ACGSF to 540,925. The CBN continued to fine-tune its Information Technology initiatives, linking deposit money banks, other financial institutions, and BDC to the bank's network. The Africa Finance Corporation (AFC) started pre-operational activities in 2007 with the issuance of US$1.0 billion equity capital. The domestic economy in 2007 was mixed, with mixed fiscal operations and a decline in federation account revenue due to youth restiveness in the Niger Delta. However, non-oil revenue increased, and the Federal Government retained revenue and aggregate expenditure increased. The Nigerian economy experienced significant growth in 2007 due to increased capital inflows, further liberalization of the market, and the deepening of the inter-bank market.

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