External reserves hit $40.4bn, highest since Jan 2014

Nigeria’s external reserves have hit a new level of $40.4 billion, data released yesterday by the Central Bank of Nigeria (CBN) has shown.

The figures d from the CBN yesterday indicated that the external reserves reached the $40.4 billion mark on Friday, January 5, 2018, indicating an increase of about one billion United States dollars between December 2017 and January 2018.

The Governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele last year said “In January 2014, Nigeria’s reserves were about $40 billion and by October 2016, it had dropped to $23 billion, all because of the haemorrhaging of foreign exchange.”

Recall also that Mr. Emefiele had at the Annual Bankers’ Dinner of the Chartered Institute of Bankers (CIBN) in Lagos last November said Nigeria’s reserve will hit $40bn this quarter.

Confirming the figure, the Acting Director in charge of Corporate Communications at the CBN, Isaac Okorafor attributed the accretion to the country’s reserves to the Bank’s strategy to effectively manage forex demand by various sectors of the economy.

Citing the CBN restricting access to from the Nigerian policy forex forex market by importers of some 41 items as the major turning point, Okorafor said “the policy had helped to stop the depleting of the country’s external reserves, which hitherto witnessed heavy depletion due to huge import bills and other debt obligations. According to him, the CBN policy had ensured a decline in Nigeria’s import bills from over $5 billion monthly in 2015 to about $1.5 billion in 2017.”

He expressed optimism that with the determination of the Bank and the cooperation of the fiscal authorities, the external reserves will continue to enjoy more accretion in the course of 2018.

Mr. Rislanudeen Mohammad, an economist and former acting managing Director, Unity Bank of Nigeria said the rising foreign reserve is good for Nigeria’s economy but the government must seize the moment and diversify Nigeria’s economy.

He said the government must find the political will to be really committed to diversification and not the current half-hearted measures.

“It’s good news because the strength of your reserves will help your economy control excess foreign exchange demands adding that with the reserves at $40bn, it will help in stabilizing the forex market.

He said the new forex reserve will also help improve the GDP figures and impact inflation too” he explained.

Mr. Muhammad advised that Nigeria should leverage on the improved incomes to diversify the economy because the incensement in our reserve is due to rise in oil price and this won’t last forever.

“The danger is, if we don’t leverage on this to diversify the economy, at anytime there are external shock on the oil prices, we will suffer” he said.

The quick diversifications wins he said remains agriculture and the slid minerals sector even as he said the refineries must also work.