Nigeria’s external reserves rose slightly to $34.49 billion on March 21, 2024. The increment could be attributed to multiple factors including inflow of foreign capital and an increase in global oil prices. Given the crucial role of foreign reserves in fulfilling import obligations and stabilizing exchange rates, the government must prioritize initiatives to bolster reserves and prevent depletion. A stronger Naira against the US Dollar hinges on the country’s foreign reserve levels. Additionally, diversifying export earnings beyond crude oil sales, the primary source of foreign earnings, is imperative.
April 4, 2024
Nigeria Economic Update (Issue 11)
Related
Nigeria Economic Update (Issue 19)
A recent report by the National Bureau of Statistics
(NBS) indicates that Internally Generated Revenue (IGR) at the subnational
level decreased slightly between 2014 and 2015. Specifically, the report shows
that on the average, the IGR of all 36 states declined by 3.6 per cent from
N707.9 billion in 2014 to N683.6 billion in 20157. A further
disaggregation reveals that while IGR in 11 states improved in 2015 compared to
2014, IGR in 24 states were below their 2014 levels. As expected, Lagos state
generated the most IGR during the period. Given that domestic resource mobilization
is the most viable alternative to complement the shortfalls (driven by lower
oil prices) in budgetary allocations to states from the federal government,
state governments need to do more to improve the effectiveness and efficiency
of revenue collection.
Nigeria Economic Update (Issue 24)
The external reserves decreased week-on-week marginally by 0.2 percent from June 9, 2017 to June 16, 2017. The reserve declined from $30.27 billion to $30.21 billion. Given that crude oil revenue constitutes the most part of the reserve, the decline may be reflective of the week-on-week drop in global crude oil price (Crude oil price fell by approximately 2 percent to $47.377 per barrel as at June 16 2017). The ongoing forex intervention by the monetary authority also poses a challenge to foreign reserve conservation. Given the unimpressive performance of global oil prices in recent time, there is need to explore other areas with great potentials to generate foreign exchange earnings. Diversification of forex earnings remains the key to insulating foreign reserve against fluctuations in global commodity prices. The country can tap into solid minerals sector as alternative source of foreign exchange. Huge investment together with investor-friendly policies in solid minerals would make the sector attractive to investors.