Researchers at the Centre for the Study of the Economies of Africa (CSEA), an economic research think-tank with primary focus on developments in Africa’s economies, have canvassed a three-point strategic policy measures for the Federal Government to implement in order to shore up Nigeria’s foreign reserves.
The analysts, in the firm’s ‘Nigeria Economic Update Issue 6’ report published on Wednesday, noted that the Central Bank of Nigeria (CBN) recently reported in its data on movement on gross foreign reserves, that the country’s foreign reserves, which were $37.1 billion as of January 3, 2023, fell to $33.1 billion by February 8, 2024, representing a 10.7 per cent decline ($4 billion) in foreign reserves.
According to the experts, due to huge drop in the reserves, the number of months of imports equivalent also dropped from 7.6 months in January 2023 to 6.8 months as of February 8, 2024.
They attributed the decrease in Nigeria’s foreign reserves to several reasons, including low export earnings due to continuous low production of crude oil and crude oil swaps, and low capital importations.
The CSEA’s economists pointed out that given the importance of foreign reserves in honouring import payments and exchange rate management, the government should prioritise actions that would curtail the rate of depletion of the reserves in the short term while implementing actions that would increase foreign exchange earnings in the medium and long term.
They further canvassed: “In the short-term, investors’ confidence needs to be further deepened through regular communication with relevant stakeholders to prevent further mass capital outflows. Also, the government should enact policies that reduce bottlenecks to remittances from the diaspora to increase Nigeria’s foreign reserves.
“The government should assist export-oriented sectors by enacting specific laws and providing incentives that can raise the competitiveness of non-oil exporting companies in global markets to boost reserves in the medium and long term”, the researchers added.
