- CBN under pressure to boost non-oil exports
There is anxiety in the monetary sector as Nigeria’s external reserves fell by $3.43bn in 2022, according to figures obtained from the Central Bank of Nigeria.
The CBN disclosed in its movement on external reserves figures that the reserves which stood at $40.52bn as of the end of December 31, 2021, ended December 29, 2022 at $37.09bn.
At the last Monetary Policy Committee meeting of the CBN in November, the Governor, CBN, Godwin Emefiele, said, “The committee observed the decline in the external reserves position, as gross external reserves decreased by 1.34 per cent at end-October 2022 to $36.87bn, from $37.39bn at end-September 2022.
“With indications of lower crude oil prices in the futures market, members urged the Bank to sustain its current policies to boost non-oil exports in order to shore up the external reserves.”
A member of the MPC, Robert Asogwa, said, “The recent drop in external reserves is, however, linked to the decline in oil exports even at a time of higher oil prices.
“Interestingly, the publicised reduction in oil thefts across the Niger delta and the rising prospects of increased overseas remittances would likely boost the gross external reserves to a large extent in early 2023.”
The CBN said in November 2022 that the country’s external reserves no longer come from selling crude oil.
Emefiele disclosed this at the 57th annual bankers’ lecture organised by the Chartered Institute of bankers of Nigeria in Lagos on Saturday, November 26.
Emefiele said due to the struggle in naira as well as the increase in the demand for forex, there has been a huge decline in foreign reserves.
He said Nigeria’s foreign reserves receipts declined from $3.0 billion monthly to zero in 2022.
The CBN governor, however, expressed optimism that the short-term outlook of the Nigerian economy remained sound, adding that diversity was important.
“The official foreign exchange receipt from crude oil sales into our official reserves has dried up steadily from above $3.0 billion monthly in 2014 to absolute zero dollars today,” he said.
Emefiele also said increasing non-oil proceeds led to Nigeria’s inflow of foreign currency.
“The bulk of the money in Nigeria’s foreign reserves comes from the export of gas and oil to other nations. But increasing instances of crude oil theft have hurt Nigeria’s ability to export enough crude oil. Consequently, its foreign exchange reserves are falling,” he added.
“Nigeria’s external reserves fell to $37.17 billion as of November 15, 2022, data from the CBN confirms. This is the lowest level of the external reserves this year and the lowest level since September 30, 2021, when the country faced a barrage of currency depreciation.”
Speaking further on the naira redesign policy, Emefiele said the apex bank’s move to redesign the three different denominations of Nigerian banknotes had a good reason.
He also said inflation rate will remain elevated and above the 12.5 percent growth-aiding threshold.
“We will maintain the current tight monetary policy stance in the near term, especially in view of rising inflation expectations and exchange market pressures,” he added.
Meanwhile, Emefiele lauded the impact of the RT200 programme, adding that it has helped the bank to meet official demands for dollars.
“The number of student visas issued to Nigerians by the United Kingdom alone has increased from an annual average of about 8,000 visas as of 2020 to nearly 66,000 in 2022, which implies an eight-fold surge to about $2.5 billion annually in study-related foreign exchange outflow to the UK alone,” he added.
“It is against the backdrop of the worsening mismatch between foreign exchange market demand and supply, and the need to boost foreign exchange earnings that the CBN and the Bankers’ Committee initiated the RT200 programme in February 2022.
“So far, we have recorded and continue to record resounding success with the RT200 programme.
“Inflows through the programme in 2022 rose to about $1.6 billion and it could surpass $2.5 billion by year-end.”
