External Reserves Gained $5.12bn In 2021 On Eurobond Debt, IMF Fund, Others
The country’s external reserves rose by $5.12bn in 2021, according to the data obtained from the Central Bank of Nigeria.
The CBN revealed that the reserves, which ended December 2020 at $35.37bn, rose to $40.53bn as of the December 30, 2021.
The CBN data showed that the external reserves, which fluctuated during the period under review, received boosts from Eurobond inflow and the International Monetary Fund’s Special Drawing Right.
The Governor, CBN, Godwin Emefiele, had recently said, “Our external reserves rose to over $41.5bn in October 2021, supported by demand management measures, the Eurobond inflow of $4bn and the IMF’s SDR.”
The SDR is an international reserve asset created by the IMF to supplement the official reserves of its member countries.
The CBN also revealed in its August month report that “aggregate foreign exchange inflow into the economy increased by 48.2 per cent to $9.85bn in August, relative to the $6.98bn in July.
“The increase reflected higher inflow through the CBN, due to the additional SDR allocation of $3.34bn from the IMF.”
A professor of Financial Economics, Professor Leo Ukpong, spoke on the impact of oil price fluctuation on the external reserves.
Ukpong, who is also the Dean of School of Business, American University of Nigeria, Yola, said, “When crude oil price goes up, you will see our reserves also increasing because the price is in our favour, and when the price of crude oil comes down, you will also see that our reserves will tend to follow suit.”
He said there had been an increase in oil price in recent times.
According to him, the country has been involved in a lot of foreign bonds which the nation’s accounting system classifies as inflow of foreign currencies even though they are debts.
This, he added, made the external reserves to rise considerably.
A former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, noted that some funds came into the country via Diaspora remittances in November and December.
To record a significant growth in the external reserves, Nzekwe said was a need for the government to increase the productivity level of the country.
Nzekwe added, “Again, before you can improve your reserve, there must be productivity. Without productivity, how can the reserves improve? The productivity is at its lowest ebb because of insecurity in the country.”
During the Bankers’ Committee Retreat in Lagos recently, Emefiele said the country could deepen its foreign exchange revenue by aggressively supporting exporters.
He said, “We also took on the issue of export aggressively; we took on issues that are impeding the ease of export in Nigeria. We listened to some exporters who lamented the problems they go through in conducting their export activities.
“The Bankers’ Committee is saying that one way that we can deepen FX revenue in the country is for us to encourage and aggressively support exporters. It is not just about providing them with finance which we are committed to, but also the fact that we should do everything possible and the CBN is engaging the various agencies of government to see what we can do to make it easy for people to conduct their export activities.”
According to him, Nigeria is endowed with raw materials and resources and must tap into its own resources rather than importing raw materials from outside the world.
“We must create jobs for our people and not export jobs to other countries. We have the human, raw materials and other resources. We want to seize the opportunity of the ‘100 for 100’ projects to really grow our economy, develop our manufacturing base for our own local consumption and, after that, begin to think about how this giant of Africa can truly behave like a giant and make itself available to support other countries in Africa and around the world through export,” he added.
A professor of Economics at the Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Sheriffdeen Tella, attributed the growth in reserves to the increase in oil exports during the year.
He said, “The reserves rose because of payment of previous purchases of oil, so the money came from oil exports.”
According to the latest data from the National Bureau of Statistics, crude oil exports contributed 76.3 per cent to the total exports in the first nine months of 2021.
“In 2022, the Federal Government should work on how to diversify the economy and the country’s exports base, so that more forex will come into the country,” he advised.