Business
Nigeria’s Foreign Reserves Fall By $1.26bn
Nigeria’s foreign reserves fell by $1.26bn from $41.76bn in October 2 to $40.5bn in October 30.
Figures obtained by The Tide from the Central Bank of Nigeria (CBN) show that the highest drop was recorded between October 4 and 7 where there was a drop of $190.3 million; October 11 to 14 with a drop of $149.18 million and October 18 to 24 with a drop of $115.4 million.
In broader analysis, the drop shows an average loss of $43,604,660 daily.
The reserves which had continued to shed in recent months dropped by $482.18m from N45.14bn as of July 8 to $44.65bn as of August 8 2019.
The bank disclosed in its economic report for third quarter of 2019 that the gross external reserves fell in the period under review.
Part of the report read: “Gross external reserves were $40.9bn as at September 25, 2019. This indicated a decrease of 8.6 per cent, compared with the level in the second quarter of 2019. The external reserves position would cover 5.2 months of import of goods and services or 9.2 months of import of goods only, based on the estimated value of import for the second quarter of 2019.
”A breakdown of the external reserves by ownership showed that the share of federation reserves was $0.27bn (0.7 per cent); Federal Government reserves, $7.0bn (17.1 per cent); and the CBN reserves, $33.62bn (82.2 per cent) of the total.”
However, some experts have attributed the downward trend of the reserves to lower crude oil prices and lower Foreign Portfolio Investors inflows.
In the past, when the reserves enjoyed some growth, the Central Bank Governor, Godwin Emefiele, had said: “External reserves have recovered significantly from $23bn in October 2016 to over $43bn as of December 3, 2018.
“While the drop in our export earnings arising from our reliance on crude oil exposed the fragility of our domestic economy in 2016, it also reinforced the view within the CBN and the Bankers Committee on the need to revise our growth strategy as a nation.”
With crude oil as a major source of the country’s foreign exchange, he said, the nation’s economy became sensitive to fluctuations in the price of crude oil.
The Lead Director, Centre for Social Justice, Eze Onyekpere told newsmen in Lagos that a reduction in foreign reserves could stem from various factors like a retardation in foreign direct investments, crash in oil prices, exceptional purchases demanding higher foreign exchange, debt servicing obligations, among others.
However, the CBN, in its robust interventions released various loans to local farmers cultivating various commodities to meet domestic demand and possibly export them. Some of the commodities are rice, oil palm, cotton, machinery and others.
More so, it has sustained its intervention in the foreign exchange market.
According to the second quarter capital importation report released by the National Bureau of Statistics, FDI inflows dropped by 31.41% from $8.48 billion recorded in the first quarter to $5.82 billion.
“Payment of tuition fees for undergraduate/postgraduate studies shall be subject to a maximum limit of $25,000.00 per semester,” the Manual states.
The expansion of international card limits also reflects growing confidence among lenders that foreign exchange liquidity has improved enough to support retail dollar transactions.
Speaking recently at the BusinessDay 14th Annual CEO Forum in Lagos, CBN Olayemi Cardoso, governor of the CBN said buying and selling activities now increasingly determine outcomes in the foreign exchange market, unlike in the past when market participants relied heavily on routine Central Bank interventions.
According to Cardoso, Nigeria’s net foreign exchange reserves have risen from just over $3 billion at the start of the reform programme to more than $40 billion, while gross reserves have climbed to about $52 billion, providing stronger confidence for investors and enabling the Central Bank to reserve interventions for periods of market stress rather than day-to-day liquidity management.
The restoration and expansion of international naira card spending limits are increasingly being seen as one of the clearest signs that the benefits of the CBN’s foreign exchange reforms are beginning to reach households, students and businesses making legitimate cross-border payments.
The Secretary-General and Chief Executive Officer, WEC, Dr Angela Wilkinson, disclosed this in a statement, last Thursday.
“Nigeria’s participation comes at a pivotal time as the country seeks to expand energy access, strengthen energy security, accelerate gas development and mobilise the capital required for industrialisation and sustainable economic growth.
“WEC Nigeria will convene leaders from across the energy ecosystem, apply the WEC’s globally recognised Energy Trilemma framework to Nigeria’s unique context, and promote evidence-based dialogue, practical collaboration and informed policymaking.
“It will also ensure that Nigerian and broader African perspectives contribute meaningfully to global energy conversations,” she said.
Wilkinson expressed confidence that Nigeria would play a significant leadership role at the World Energy Congress scheduled for Riyadh in April 2027 and beyond.
The statement also quoted the Chairman of WEC Nigeria, Isa, as describing the country’s participation as an opportunity to deepen national and African leadership within the global energy community through practical solutions tailored to regional development priorities.
He said the platform would promote collaboration across sectors and attract sustainable investments into Nigeria’s energy sector.
The Chief Executive Officer of WEC Nigeria, Wunti, was quoted in the statement as saying that the council would connect leadership, evidence and investment to build a secure, affordable and sustainable energy system.
“This system will be capable of driving economic growth and shared prosperity.”
According to him, the platform will also connect Nigerian institutions and businesses with international knowledge, technology, partnerships and investment opportunities through the World Energy Council’s global network.
Recall that WEC, founded in 1923, is the world’s oldest independent and impartial community of energy leaders and practitioners, advancing informed, collaborative and practical action across the global energy system.