Going by data from the Central Bank of Nigeria, the country has seen its external reserves grow by $244 million in nineteen days, coming after a period of decline that saw the reserves go down by $313 in March 2022. The difference being experienced down reflects the dual nature of Nigeria’s status as an exporter of crude oil and at the same time, an importer of refined petroleum products. Unsurprisingly, most of Nigeria’s foreign exchange inflow – as well as outflow- is through its oil industry. The previous decrease in the volume of external reserves is a result of two factors: the reduction in theft to its upstream oil and gas sector that had affected Nigeria’s delivery of its OPEC production quota as well as the NNPC’s inability to remit revenue from oil sales into the federation account. On the week’s final episode of Business Edge, Lekan Onabanjo takes a look at the increase in Nigeria’s external reserves. He’s joined by Dr Soji Akinyele, an economist and government relations expert who speaks from Lagos, Nigeria.
The external reserves refer to assets that are held in foreign currency on behalf of the country, either in financial instruments or gold or the IMF special drawing rights. The $244 million seen in March is indeed again, but when compared to what it was this time last year, one would see that it still hovers around $39 billion in total. In 2019, the external reserves reached $44.8 billion.
“While a movement is seen in the external reserves, a lot more still needs to be done [in order to further expand the economy and] extract the value that is required to see significant,” Dr Akinyele says while pointing out that in another two and a half months, the external reserves might decrease by as much as $300 million owing to a Eurobond that is due to be redeemed in June 2022.
Watch the full conversation on Business Edge above.