Is Nigeria’s foreign reserve less than Harvard University’s $40bn endowment?
A former Nigerian Presidential Candidate, Kingsley Moghalu, claimed in a recent twitter post that $40 billion Harvard University’s endowment is larger than Nigeria’s Foreign Reserve.
True. Data from the Central Bank of Nigeria (CBN) showed that from December 31, 2019 to August 6, 2020, Nigeria’s gross Foreign Reserve has remained below $40 billion. Data from Harvard Management Company put Harvard University’s endowment at $40.9 billion. This shows that Harvard University’s endowment is larger than Nigeria’s Foreign Reserve.
VERDICT: Full Text
On August 7, 2020, a former Presidential Candidate, Kingsley Moghalu, claimed in a twitter post that Nigeria’s Foreign Reserve was less than Harvard University’s $40 billion endowment.
“Some facts that put our need to invest in education in Nigeria in perspective: Harvard University’s endowment, at $40 billion and managed by Harvard Management Company Inc. is larger than Nigeria’s entire foreign reserves,” he tweeted via his handle@MoghaluKingsley.
Moghalu, a former Deputy Governor of financial system stability and director in the CBN, added that “these endowments come from gifts from wealthy donors, contributions from alumni of these institutions, profits from tuition and other fees etc.”
Nigeria’s Foreign Reserve
Foreign exchange reserves (also called forex reserves or FX reserves) are cash and other reserve assets held by a central bank or other monetary authority that are primarily available to balance payments of the country, influence the foreign exchange rate of its currency, and to maintain confidence in financial markets.
Reserves are held in one or more reserve currencies, nowadays mostly the United States dollar and to a lesser extent the euro.
Managing External Reserves is one of the core mandates of the Central Bank of Nigeria (CBN) as stipulated in Section 2 (c) of the CBN Act of 2007.
The Act vested the maintenance and management of Nigeria’s external reserves on the CBN in order to safeguard the international value of the Naira. In addition, it is to maintain confidence in Nigeria’s monetary and exchange rate policies, as well as provide confidence to the international community that the country is able to meet its external obligations.
The CBN through interventions in the foreign exchange market supports monetary policy implementation by maintaining exchange rate stability and liquidity management.
Harvard University's endowment
Information sourced from Harvard University report showed that Harvard’s endowment is a dedicated and permanent source of support for Harvard University and its mission of teaching and research, in the present and forever.
The aggregate endowment is made up of more than 13,000 individual endowments created over the last 350 years, which support faculty and students, including professorships and financial aid for undergraduates, graduate fellowships, and student life and activities.
The Chief Executive Officer of Harvard Management Company, Narv Narvekar, revealed that the donor contributions to the endowment have enabled leading financial aid programmes, groundbreaking discoveries in scientific research, and hundreds of professorships across a wide range of academic fields.
Each year, a portion of the endowment is paid out as an annual distribution to support the University’s annual operations. Any appreciation in excess of this annual distribution is retained in the endowment so it can grow and support future generations. As a result, the endowment can provide the financial foundation for the University for generations to come.
But, how true is it that the endowment is higher than Nigeria’s Foreign Reserve?
Verification
Nigeria’s apex bank, the CBN maintains a public database of the country’s Foreign Reserve movement over time.
Data from the database showed that as at December 31, 2019, Nigeria’s Foreign Reserve was $38.6 billion.
BusinessDay also reported that the country’s Foreign reserve grossed $38.9 billion by the end of 2019.
The reserve dropped to $38.54 billion by January 2, 2020 and then dipped further to $35.68 billion as at August 6, 2020, a day before Moghalu made the claim on twitter.
This shows that since December 31, 2019 to July 6, 2020, Nigeria’s Foreign Reserve has remained below $40 billion.
However, Harvard University’s Financial Report for 2019 showed that Harvard’s endowment increased from $39.2 billion at the end of 2018 to $40.9 billion at the end of 2019.
The report disclosed that cash gifts for endowment were $613 million in fiscal year 2019 compared to $646 million in fiscal year 2018, bringing the total endowment to $40.9 billion by the end of 2019.
The 2019 Financial Report is the latest report on the gross value of the endowment.
Meanwhile, both Harvard Magazine and The Harvard Crimson have separately put the fund's total value at $40.9 billion as at the end of 2019, translating to a $1.7 billion increase from 2018.
Therefore, data from both the CBN and the Harvard University showed that Nigeria’s Foreign Reserve is less than Harvard University’s N40.9 billion Endowment.
Conclusion
It is true that Harvard University’s endowment is larger than Nigeria’s Foreign Reserve. Data from the Central Bank of Nigeria (CBN) showed that from December 31, 2019 to August 6, 2020, Nigeria’s gross Foreign Reserve has remained below $40 billion while data from Harvard Management Company put Harvard University’s endowment at $40.9 billion. This shows that Harvard University’s endowment is larger than Nigeria’s Foreign Reserve.