At $47.3bn, Nigeria’s Foreign Reserves Hit Five-year High

Ndubuisi Francis, Obinna Chima and Nume Ekeghe in Uyo

Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, Monday said the country’s foreign exchange (FX) reserves had risen to $47.3 billion as of April 5.
The last time the country recorded FX reserves at this level was in July 2013.

Speaking at a seminar for Finance Correspondents and Business Editors in Uyo, Akwa Ibom State, Emefiele, who was represented by the new Deputy Governor, Corporate Services, Mr. Edward Adamu, was also upbeat that the reserves would continue to rise to about $50 billion “sometime later this year”.

At $47.3 billion, the country’s reserves are still below that of South Africa’s whose gross reserves currently stand at $50 billion.

Accretion of the country’s reserves in recent months have been driven by its successful Eurobond offerings, coupled with higher oil production and prices.
At the two-day seminar, Emefiele was also optimistic that inflationary pressure would continue to ease, anticipating that it may return to very low double digit or high single digit levels during the year.

He, however, called for more vigilance by policy makers to ensure that the country does not slip again into a recession.
The CBN governor said: “We expect a re-doubling of strong policy coordination, collaboration and cooperation which flourished during the very difficult times.
“To sustain our recovery, the need is greater now than ever for a robust policy coordination between the key aspects of the economic policymaking space.

“This would include fiscal, monetary, exchange, and trade policies, which must be targeted at protecting farmers to boost agricultural output, support local companies and enhance manufacturing and industrial capacities, with a view to diversifying the economy away from oil and fossil fuels.
“Those of us who has been entrusted with leadership and policymaking responsibilities must neither become complacent nor over-confident. We must strive to improve and sustain the same policies that have gotten us this far.”

Emefiele reiterated that the central bank has been able to ensure exchange rate stability from over N525 to a dollar in February 2017, to about N360 to the dollar.
Foreign exchange supply has also improved since the establishment of the Investors’ and Exporters’ Window, with autonomous inflows of over $20 billion through this window alone from April 2017 to date, he said.

“As sentiments improve on the macroeconomy and supported by proactive monetary, trade, industrial and fiscal policies, we expect a continued uptick in GDP growth with a positive spill over to improved employment rate.

“As policies to strengthen the agriculture and industrial sectors become more emergent, growth in these sectors will rise, further bolstering overall economy.
“As we entrench and sustain the transparency in the FX market, as FX reserves accretion continues, and market confidence and improved sentiments remain, we expect that the exchange rate will not only be stable but would begin to appreciate against major currencies.

“The adverse competitiveness outcome which such appreciation may entail would be adequately mitigated by proactive policies to ensure that our balance of payments position is not undermined.

“For one, our import bill may have fallen but our manufacturing and agriculture sectors still have a long way to go if we must attain self-sufficiency in those sectors.
“We must not be quick to discard the restrictive measures which aided our recovery simply because the metrics have improved.

“At the CBN, we will continue to fine-tune our policies and strategies based on our understanding of evolving developments and supported by in-house technical analysis and simulations.
“We will remain proactive in ensuring that the welfare of Nigerians is optimised at any point in time,” he said.

He pointed out that at the last Monetary Policy Committee (MPC) meeting, the central bank had “signalled that we will sustain the tight policies that have helped rein-in inflationary pressures”.
This, according to him, was the reason members of the committee decided to keep the Monetary Policy Rate (MPR) at 14 per cent.

“We will also continue the transparency that has attracted inflows of FX into the country while keeping FX supply to the market adequate.

“In the area of development finance, the Bank will continue to provide access to much-needed credit to sectors with the potential to create jobs on a mass scale.
“In this regard, we will explore opportunities to expand the highly-successful Anchor Borrowers’ Programme to other crops and states.

“In order to continue our gains in local production and provide assistance to boost non-oil exports, we are in the process of finalising the creation of a N500 billion fund with the Nigeria Export-Import Bank (NEXIM) to assist local manufacturers interested in non-oil exports,” he added.