MPC retains brakes on policy rates

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During the past year of declining real output, cost-push inflationary pressure and lacklustre foreign appetite for Naira assets, the Monetary Policy Committee (MPC) adjusted three of its four key parameters in its quest to boost lending and reflate the economy.

After considering several real, monetary, and external factors, the MPC decided to maintain status-quo by holding all parameters constant in its first meeting of the year.

Current Monetary Policy Variables

MPC retains brakes on policy rates brandspurng
Source: NBS, Vetiva Research

Trudging a sticky recovery path

Citing vaccine developments and its impact on oil price recovery and external reserve accretion, the MPC noted that the virus remained a threat to economic recovery given the spike in fatalities and rapid spread of a newer strain of the virus.

Against this backdrop, the Bank cautioned against a second wave of lockdown due to the downside risks it poses to the anticipated recovery.

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Making reference to recent GDP numbers, the Committee noted the milder economic contraction recorded in Q3’20 (-3.62%) compared to Q2’20 (-6.10%) due to the reopening of the economy. However, the lag effects of the lockdown, security challenges and FX challenges are contributory factors to dampened recovery prospects.

While the END SARS protests extended the contraction in manufacturing activity into the month of October, the brief recovery in November could not be sustained into December due to the stifling impact of the FX situation.

With two bearish readings out of three, the manufacturing PMI predicts another quarter of declining industrial output in Q4’20 while the consistently underwhelming services PMI reading portends another bearish outturn for the services sector.

Amid shaky recovery expectations, consumer prices have been surfing the inflationary tide for 5 years, unable to meet the threshold set by the Central Bank. With the recent reforms adopted by fiscal authorities, inflation may continually soar beyond current levels.

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CBN retains MPR at 11.5%, Holds other Key Parameters Constant
Governor, CBN, Godwin Emefiele |

Further increases in the pump price of PMS and electricity tariffs are expected to propel inflation further during the year. However, the Central Bank projects moderation in growth headwinds, as continuous fiscal and monetary intervention measures permeate the economy.

Read Also:  Oando Announces that the NNPC/NAOC/OANDO JV has made Significant Gas & Condensates Discovery Onshore Niger Delta

MPC to sustain a dovish stance

The CBN’s decision to hike the Cash Reserve Ratio (CRR) in H1’20 amid enforcement of loan-to-deposit ratio (LDR) floors raised several concerns over liquidity in the banking system.

Despite the hostile business climate, huge deductions were made from banks’ reserves for not meeting LDR benchmarks, limiting room for credit expansion. According to Q3’20 GDP numbers, growth in the financial services sector slowed to single-digit levels, partly because of the high base effect.

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At the meeting, the Committee commended the CBN on the industry’s low non-performing loans ratio, which is slightly above the prudential benchmark despite its aggressive credit expansion programme. However, we note the subsisting headwinds in the business environment could have contributed to the slowdown in loan expansion amid restrictive CRR debits.

Given the dismal PMI readings, the CBN may sustain its accommodative stance by keeping rates low and ramping up development finance activities. In addition, further rate cuts could be meted out in future meetings should real output continue its recessionary trend in Q4’20 and Q1’21.

While further rate cuts could support economic recovery, the Bank’s dovish stance could support fiscal policy given the CBN’s role in financing 2020 fiscal deficit, already high debt servicing-to-revenue ratio and the recent passage of the 2021 budget.

With the recent recovery in oil prices, elevated energy costs could drive inflation further from the Central Bank’s target for the sixth consecutive year. While the reopening of the borders should serve as a disinflationary trigger, the continued bans on rice & poultry imports through the land borders would keep inflationary pressures high.

Thus, we expect the CBN to continue its supply-side interventions, accelerate credit access to medium and small-scale enterprises and devise targeted funding strategies to propel economic recovery.

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MPC retains brakes on policy rates - Brand SpurMPC retains brakes on policy rates - Brand Spur

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MPC retains brakes on policy rates - Brand SpurMPC retains brakes on policy rates - Brand Spur

Latest News

Kinaxis Named a Leader in the 2021 Gartner Magic Quadrant for Supply Chain Planning Solutions Report

Kinaxis evaluated on both execution and vision with furthest placement for completeness of vision in the Leaders quadrant


OTTAWA, CANADA - Media OutReach - 4 March 2021 - Kinaxis® Inc. (TSX:KXS), the authority in driving agility for fast, confident decision-making in an unpredictable world, today announced it has been named a Leader in the 2021 Gartner Magic Quadrant for Supply Chain Planning Solutions. The company is recognized for both the ability to execute and its completeness of vision. Kinaxis is positioned furthest on the Completeness of Vision axis amongst those in the Leaders quadrant 1.

A complimentary copy of the report can be downloaded from Kinaxis. This is the seventh consecutive time Kinaxis has been named a Leader in a Gartner Magic Quadrant related to supply chain planning 1 .

"In the face of the unprecedented level of disruption over the past year, corporate supply chains have never been more relevant and doing nothing to improve planning has become the biggest risk. Supply chain leaders at companies of all sizes have recognized a need for a transformational shift to agility and resiliency based on a new planning technique -- concurrent planning, that only Kinaxis can provide," said John Sicard, CEO of Kinaxis. "Kinaxis uniquely combines AI, analytics and human intelligence to empower innovative manufacturers to eliminate functional silos and cost-effectively optimize the potential of their supply chains in just a few weeks."

Continued Sicard, "We believe we are the leading innovator based on vision in the market and are thrilled with our positioning for our current, proven RapidResponse platform. Kinaxis takes pride in our talented team, the collaborative relationships we have with our customer and partner community and helping advance the craft of supply chain planning for the benefit of the planet."

Top-tier manufacturers around the world use Kinaxis in the aerospace and defense, automotive, consumer products, high-tech and electronics, industrial, life sciences and retail industries, including Unilever, Schneider Electric, Flex, Merck, Technicolor, Alstom and Honda, and many others.

Read Also:  CBN MPC Retains MPR and Liquidity Ratio; Raises CRR to 27.5% In First Meeting of 2020

"Schneider Electric's supply chain digitalization journey, including our work with Kinaxis, has allowed us to function as a truly global enterprise," said Mourad Tamoud, Chief Supply Chain Officer at Schneider Electric. "Through our engagement with Kinaxis, we have found them to be industry-leading, and the partnership has enabled us to have greater transparency, wider collaboration and increasingly autonomous high-quality decision-making throughout the organization."

Kinaxis RapidResponse® is a cloud-based software-as-a-service (SaaS) platform purpose-built for planning, leveraging patented in-memory database technology and always-on algorithms. Combined with Kinaxis' unique concurrent planning technique and AI, RapidResponse helps global manufacturers gain agile and resilient supply chains. The Kinaxis suite of ready-to-deploy planning applications (S&OP / IBP, Demand, Supply, Command & Control Center, Inventory, Live Lens Insights) is optimized with industry best practice processes and robust analytics that are synchronized across long and short-term planning and across the end-to-end network from customers to suppliers. The RapidResponse platform is uniquely extensible to build, access or connect to custom applications, algorithms and external systems across the supply network ecosystem.

Kinaxis helps customers accelerate value realization with multiple deployment options to go-live in as little as six weeks. These seamlessly expandable options allow companies to start now and focus on the most important initiatives. All based on RapidResponse, these options can grow over time to meet budget, team and change management needs along the digital transformation journey.

"Gartner defines a supply chain planning (SCP) solution as a platform that provides technology support which allows a company to manage, link, align, collaborate and share its planning data across an extended supply chain. It supports demand creation through to the detailed supply-side response and from strategic planning through tactical-level planning. An SCP solution is the planning decision repository for a defined end-to-end supply chain and is the environment in which end-to-end integrated supply chains are managed. It establishes a single version of the truth for the plan data and decisions, regardless of the underlying execution technology environment." 1

The SCP market was worth $5.2 billion in 2019 and is projected to grow at a five-year compound annual growth rate (CAGR) of 7.5% according to the Gartner Forecast: Enterprise Application Software, Worldwide, 2018-2024, 4Q20 Update. 2

According to Gartner, "Leaders demonstrate strong SCP solution vision and execution capabilities. They have a broad, deep and differentiated functionality that addresses a broad range of user requirements. Their coverage across the three categories of planning capability -- configure, optimize and respond -- is good enough, with a good balance across the categories now and/or planned for the future. They have a reasonable range of features to support a user's maturity journey. Their visions for supporting the three paradigms of SCP -- algorithmic SCP, digital supply chain planning and resilient planning -- align with Gartner's vision. When these three paradigms are blended together, they build the foundation to support a Level 5 SCP environment. Leaders anticipate where customer demands and markets are moving and identify how innovative technologies can be applied to planning applications. They have strategies to support these emerging requirements to build a future-proof SCP solution. Because leaders are well-established in leading-edge complex user environments, they benefit from a user community that helps them remain in the forefront of emerging needs." 1

For further information, you can access a complimentary copy of the full Magic Quadrant for Supply Chain Planning Solutions report here.

1 Gartner, Magic Quadrant for Supply Chain Planning Solutions, A. Salley, T. Payne, P. Orup Lund, Feb. 22, 2021

Gartner, Magic Quadrant for Sales and Operations Planning System of Differentiation, T. Payne et al, May 7, 2019; Gartner, Magic Quadrant for Supply Chain Planning System of Record, Payne, Tim, Pradhan, Alex, & Salley, Amber, 21 August 2018

2 Gartner, Forecast: Enterprise Application Software, Worldwide, 2018-2024, 4Q20 Update, Amarendra, N. Gupta, B. Abbabatulla, A. Woodward, C. Pang, C. Roth, E. Hunter, J. Hare, K. Quinn, J. Poulter, Y. Dharmasthira, J. Kostoulas, December 22, 2020

Gartner Disclaimer:

Gartner does not endorse any vendor, product or service depicted in our research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

About Kinaxis Inc.

Everyday volatility and uncertainty demand quick action. Kinaxis® delivers the agility to make fast, confident decisions across integrated business planning and the digital supply chain. People can plan better, live better and change the world. Trusted by innovative brands, we combine human intelligence with AI and concurrent planning to help companies plan for any future, monitor risks and opportunities and respond at the pace of change. Powered by an extensible, cloud-based platform, Kinaxis delivers industry-proven applications so everyone can know sooner, act faster and remove waste. For more Kinaxis news, visit or follow us on LinkedIn or Twitter.

Forward-Looking Statements

Certain statements in this release constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements include statements as to Kinaxis' growth opportunities and the potential benefits of, and demand for, Kinaxis' products and services. These statements are subject to certain assumptions, risks and uncertainties, including our view of the relative position of Kinaxis' products and services compared to competitive offerings in the industry. Readers are cautioned not to place undue reliance on such statements. Kinaxis' actual results, performance, achievements and developments may differ materially from the results, performance, achievements or developments expressed or implied by such statements. Risk factors that may cause the actual results, performance, achievements or developments of Kinaxis to differ materially from the results, performance, achievements or developments expressed or implied by such statements can be found in the public documents filed by Kinaxis with Canadian securities regulatory authorities. Kinaxis assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.

MPC retains brakes on policy rates - Brand Spur
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