By Folarin Emmanuel, Abuja
The latest improvement in Nigeria external reserves to $40 billion will bring confidence into the African biggest economy, according to Boniface Chizea, a Lagos State base financial analyst and Managing Director BIC Consultancy Services.
Chizea in exclusive interview with our correspondent explained that the more improvement in the external reserves, the more credit worthy and confidence it would bring into the country.
He said, “More portfolio investors import their foreign exchange to invest in the capital market, more confidence and price instability opens door for the economy. It serves as attractiveness for the country as an investment designation.
“The CBN can still do more; it is still putting money into the foreign exchange market. The apex bank, two days ago injected $210 million into interbank window of the foreign exchange market.”
Nigeria due to its over reliance in oil was one of the hardest hit economies when the global oil price crashes in 2014.
The last time the foreign reserves hit the $40 billion mark was January 2014, about five months before the crash in global oil prices. The foreign exchange reserves reached a low of $23.6 billion in October 2016.
According to Chizea, there was need for diversification of the Nigeria economy, saying, “for those of us who have been around for a while, in 1986 we started the structural adjustment program and all emphasis was to diversify the economy of this country from oil export.
“One thing about Nigeria is having been unable to implement it policies.”
The CBN on Monday confirmed that the external reserves reached $40.4 billion on Friday, January 5, 2018, an increase of about $1 billion between December 2017 and January 2018.
The foreign exchange reserves, which stood at $38.765 billion on December 29, 2017, rose to $39.074 billion on January 4, data on the CBN showed.
The reserves had risen by 50 per cent in the last one year to $38.73 billion on December 28, 2017.
Specifically, the foreign reserves gained $12.9 billion between December 2016 and December 2017, according to the data. Between January and October 2017, the reserves rose by $8 billion, indicating a 30.9 per cent increase when it recorded $33.83 billion on October 31.
Godwin Emefiele, CBN Governor, had at the Annual Bankers’ Dinner of the Chartered Institute of Bankers in Lagos last November, projected that the foreign exchange reserves would hit the $40 billion mark before the end of 2018.
Isaac Okorafor, Acting Director in charge of Corporate Communications at the CBN, attributed the growth to the country’s reserves to the bank’s strategy to effectively manage forex demand by various sectors of the economy.
Citing the CBN policy restricting access to forex from the Nigerian forex market by importers of some 41 items as the major turning point, Okorafor said the policy had helped to stop the hemorrhaging 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.