VenturesNow

Nigeria’s external reserves fall by $1.65bn in 6 months

Published

8 months ago

December 6, 2023

A fall in Nigeria’s foreign reserves by $1.6 billion to $32.97 billion has been observed since the country’s central bank’s recent efforts to unify foreign exchange rates.

In June, the central bank informed all authorised dealers and the general public of the following immediate changes to operations in the Nigerian Foreign Exchange Market: Abolishment of segmentation.

“All segments are now collapsed into the Investors and Exporters window. Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks. Re-introduction of the ‘Willing Buyer, Willing Seller’ model at the I&E Window. Operations in this window shall be guided by the existing circular on establishing the window,” the CBN had said in the June statement.

Foreign exchange reserves and the value of the naira have decreased since then. The nation had $34.62 billion in gross foreign exchange reserves as of June 15. However, the foreign exchange reserves fell to $32.97bn as of December 1, 2023, according to data from the CBN.

The Economist Intelligence Unit revealed in its most recent Africa Outlook report that Nigeria lacked sufficient foreign exchange reserves to support its policy of unifying its exchange rates.

It said, “In Nigeria, an unsupportive monetary policy implies that the naira will remain under pressure, while the central bank lacks the firepower to adequately supply the market or clear a backlog of foreign exchange orders, which will keep foreign investors unnerved. High inflation and a continued spread with the parallel market will destabilise the exchange rate regime and result in periodic devaluations.”

Additionally, JP Morgan recently calculated that Nigeria’s net foreign exchange reserves were $3.7 billion after taking into account larger-than-anticipated currency swaps and borrowing against reserves. Though the CBN may source foreign exchange at commercial and semi-commercial rates, it was noted that the low net foreign exchange reserves put pressure on the foreign exchange market.

Sources close to the government have hinted that as part of measures to ensure liquidity in the country’s forex market, the Nigerian government has begun engagement with persons hoarding the dollar, as well as organizations and those found to have looted the treasury, to make them “bring their monies to the mainstream market.”

The Nigerian government has sought to stabilize the country’s economy with two major policy actions: the removal of the fiscal bleeding in petrol subsidies and the unification of the exchange rate. The results have not been positive, with the further fall of its currency value and the sharp rise in the cost of living.

Related Topics:Featured Foreign exchange Naira Nigeria

Click to comment

VenturesNow

Nigeria has received $10.9 billion multi-sector investments from AfDB— Official

Published

4 days ago

July 23, 2024

Ifeoluwa Dada

Nigeria has received $10.9 billion from the African Development Bank (AfDB), comprising $4.9 billion in public and private sector initiatives.

AfDB Director-General of the West Africa Region, Lamin Barrow, said the bank’s Nigeria funding approvals total $10.9 billion since it started operations.

Barrow made the revelation at the Second Interactive Session and Workshop on Developing Bankable Business Proposals/Business Plans for Youths in Agriculture in Abuja on Monday.

It was part of the bank’s 60th anniversary celebrations with stakeholders. Nigeria is the AfDB’s largest shareholder, and the bank’s relationship with it has grown, Barrow said.

The AfDB invests in Nigeria’s energy, power, transport, water, and sanitation infrastructure.

“Over the last 60 years, the Bank has grown into a trusted partner and the continent’s premier development financial institution.

“Our cooperation with Nigeria has expanded over the years, especially considering that Nigeria is the largest shareholder.

“Since it started operations in the country, cumulative financing approvals have reached 10.9 billion dollars and our portfolio currently stands at 4.9 billion dollars supporting projects in the public and private sectors,” he said.

After taking office eight years ago, AfDB President Dr Akinwumi Adesina prioritized the High 5—Power, Feed, Industrialize, Integrate, and Improve Africa’s quality of life—Barrow added. He said these were accelerators for achieving the SDGs and Agenda 2063 ambitions. The projects and programs supported during this time have reportedly affected over 400 million individuals.

VenturesNow

Analysts expect Egypt’s economy to rise 4.0% in 2024/25

Published

4 days ago

July 23, 2024

Ifeoluwa Dada

A recent study that sampled seventeen economists by Reuters has predicted slower economic growth for Egypt in April after a $8 billion IMF accord in March.

The median projection for GDP growth in the fiscal year starting July 1 was 4%, down from 4.35% in April and 4.15% in January.

The poll predicted the GDP grew 2.9% in the fiscal year ending June 30. This is below their April and January predictions of 3% and 3.5%. Poll: 2025/26 growth should rise to 4.99%.

After the IMF agreement, Capital Economics’ James Swanston predicted slower growth due to tighter fiscal and monetary policies and a weaker pound.

“The overall net impact is that economic growth will be weaker this fiscal year, but there are reasons to be more optimistic on GDP growth from FY2025/26 onward,” Swanston said.

Egyptian tourism and Suez Canal revenue have slowed due to the Gaza crisis, which has cut Egypt’s foreign revenue by more than half.

Egypt’s planning ministry predicted 4.2% growth in 2024/25 on June 2. Analysts expect the Egyptian pound to fall to 49.50 per dollar by June 2025 and 52.50 by June 2026.

Before dropping it in March 2024, the central bank kept the pound at 30.85 per dollar. It’s roughly 48.40 per dollar.

The survey forecast 20.5% headline inflation in 2024/25 and 12.05% in 2025/26. In June, inflation dropped to 27.5% from a record high of 38.0% in September, exceeding the central bank’s objective of 5%-9%.

The analysts expect the central bank’s overnight lending rate to drop to 21.25% by June 2025 and 15.25% by June 2026.

Foreign money shortages have slowed the Egyptian economy. However, a $24 billion real estate transaction with the UAE in late February, a significant currency devaluation, and a $8 billion IMF accord in early March have mitigated that.