Document Type

Annual Report

Publication Title

Central Bank of Nigeria Annual Report and Statement of Accounts for the Year Ended 31st December, 1965


CBN Annual Report and Statement of Accounts for 1965 discussed the economic performance of Nigeria with emphasis on inflation rate, GDP growth, exchange rate stability, banking sector performance, monetary policy, financial stability, fiscal policy, and regulatory updates. Two major developments dominated the world economic scene in 1965. One was the overall slowdown of economic expansion in most industrialized countries. The other was the overall contraction in the growth rate of world trade and in the flow of international capital. Due to the problem of balance of payment disequilibrium, the industrialized countries intensified economic measures to achieve internal stability and equilibrium in the balance of payments. In I965, the overall slow-down of economic activity in the industrial countries widened the gap between supply and demand for primary exports, thus reducing further the developing world's share of the benefits of international trade. By the beginning of the fourth quarter of 1964, and under the stimulus of rising wages, accelerated government deficit financing, and expanding credit to the private sector, a balance of payments crisis was no longer a potential, but real threat. Aggregate bank credit rose very sharply; money supply was on the rise; Nigeria's trade imbalance at £8.3 million at the end of the second quarter, deteriorated further to £21.4 million, and the country's external reserves fell to £83.9 million from the £98.0 million at the beginning of 1964. The intensification of expansionary forces in the fourth quarter of 1964 only accentuated the balance of payments problems. It was in this circumstance that the monetary and fiscal measures of late 1964 were instituted. In the sphere of fiscal policy, the federal government in August 1964 imposed higher customs tariffs on a wide range of imports. It also announced a drive to curtail government expenditures. In addition, the Central Bank undertook complementary monetary measures. However, it was recognized that under the Nigerian conditions of relatively undeveloped money and capital markets, the effectiveness of monetary policy on aggregate liquidity was limited. Agriculture, in terms of Its contribution to the GDP, remained the dominant sector. The mining sector of the economy recorded the most notable gain in 1965. Although the output of all industries In this sector rose, the most significant achievement was made by the petroleum industry. The average daily rate of crude oil production was 274.2 thousand barrels-127.4 percent more than in 1964. Ln the manufacturing sector, a high level of activity was maintained throughout the year. The agricultural sector, which includes livestock, fishing and forestry, is estimated to have accounted for 63 percent of the total GDP in 1965, as against 65 in 1960. The total output of agriculture increased by only 3 percent during the year. The recovery of trade and industry in the middle of 1963 continued through 1965. The manufacturing sector recorded 128 additional plants during the year. Nigeria's financial system experienced further growth in 1965. The pace of banking development was firmly forward. The third branch of the Central Bank was officially opened in Ibadan in December. The foundation stones of two more branches, at Enugu and Benin City, were also laid during the year. The number of commercial bank branches increased by 14 in the year to 240. Bank credit to the economy aggregated £169.7 million at the end of the year-about £10.6 million or 6.7per cent larger than at the end of 1964.More than 95 percent of the net rise in credit granted went to the public sector. Money supply= rose by £4.8 million or 3.1 per cent over the year to £157.4 million at the end of December 1965. This compares with an increase of £21.0 million or 16.0 percent in 1964. Developments in the money and capital markets were mixed in 1965. The monthly issues of treasury bills and amounts outstanding averaged 12.2 and £36.8 million, respectively, compared with 10.9 and £31.4 million in 1964.

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