Nigeria's
foreign reserve has continued to grow under the administration of
President Muhammadu Buhari as Nigeria struggles with economic recession
President Muhammadu Buhari
Nigeria’s foreign reserve has recorded 18.2 per cent accretion
since its recent uptrend, standing at $27.4 billion with the latest
figures from the Central Bank of Nigeria, CBN, for January 2017.
The uptrend which began October 20, 2016 had persisted with minor
pullbacks recorded on November 1, 2016 and December 14, 2016, reversing
the over one-year persistent decline which bottomed out at $23.2bn on
October 19, 2016.
In the 12 weeks upward trend, the reserve added $4.2 billion as
against $8.6 billion it had lost since President Muhammadu Buhari came
into power in 2015.
The latest figure of the reserve is also on 10 months high over the
last one year while indications are that accretion would continue on
the back of improved oil revenue.
The month-on-month trend shows an increasing tempo in the month of
January 2017 when it garnered $2.002 billion, a huge 7.9 per cent rise.
December 2016 accretion was $1.025 billion, about 4.2 per cent rise
while November recorded accretion of $840 million, about 3.6 per cent
rise.
The uptrend was largely as a result of the rises in the
international oil price (Nigeria’s major foreign exchange earner) in the
recent month especially in January when it settled above $55 per
barrel, as against last year’s average of $43 and 2015 average of $38.
The positive development in the international oil price began mid
last year but Nigeria could not benefit much from it due to worsened
militancy in the Niger Delta which curtailed oil production and exports
with output at a record low of about 1.4 million barrels a day.
However, the positive development could not roll back the massive
exchange rate pressure which had come on the Naira since last year.
Eventually the Naira/USD value crashed beyond N500/USD1 this week as
supply of foreign exchange remained elusive.
Also the positive development in the external sector seems not to
have resonated with the revenue pressure the federal government has been
experiencing since 2015.
In addition to over N400 billion the government had borrowed from
the money market in the month of January 2017, it plans to raise $300m
(almost N100bn) by selling a Diaspora Bond targeting Nigerians living
abroad.
The bond, which will have a maturity of five to seven years, is expected to be issued by June this year.
Nigeria has asked Goldman Sachs and Stanbic IBTC Bank, the local
unit of South Africa’s Standard Bank , to advise it on the sale of the
maiden bond. It also appointed United Bank for Africa and First Bank of
Nigeria as advisors on the deal.
The government is also pressing on with its request on the National
Assembly to approve its external borrowing plan targeting $30bn (about
N10tr).
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