Latest data by the Central Bank of Nigeria (CBN) at the weekend showed that the nation’s external reserves pool improved by $2,270.437 million or 7.82 per cent, to $31.270 billion on July 29, from $29.00 billion the end of previous month.
On a month-on-month basis, the rise was $2.262 billion or 7.80 per cent, while on year-to-date basis, the drop in reserves level reduced to $3.197 billion or 9.28 per cent from $34.468 billion as of December 31, 2014.
An analysis of the reserves movement shows that in the three months between last year-end to March 31, 2015, Nigeria’s foreign reserves level dropped by $4.678 billion to $29.789 billion.
On a year-on-year basis (July 29, 2014 to July 29, 2015), the reserves level has lost $8.011 billion or 20.39 per cent.
According to available data on the CBN website, the reserves hit its peak over the past two years on August 12, 2013, when it closed at $47.091 billion, after which it started a steady decline.
Encouraged by the growth at the time, the Federal Government, through fiscal policies, attempted in 2013 to shore up the nation’s foreign reserves to $50 billion, but then, the CBN has had to rely heavily on the reserves to defend the Naira, which has come under intense pressure over the years from Nigeria’s import dependent economy and the sharp drop in crude oil at the international market.
In a communiqué at the end of last month’s Monetary Policy Committee (MPC) meeting in Abuja, CBN Governor, Godwin Emefiele, who chaired the gathering, told newsmen that one factor considered by members was the relative stability in exchange rate in the inter-bank segment (or market, which) can be attributed to the effects of some recent demand management measures.”
The apex bank had last month banned the sale of foreign exchange to importers of 40 items, warning banks and Bureaux de Change (BDC) operators of sanctions for violation.
The move is part of efforts to ensure tighter controls on the foreign exchange market and curb speculations on the naira to protect the nation’s dwindling reserves.
The affected items, including: Rice, cement, margarine, palm kernel/palm oil products/vegetable oil, meat and processed meat products, vegetable and processed vegetable products, poultry –chicken, eggs, turkey – private airplanes/jet, Indian incense, tinned fish in sauce- Geisha/Sardines, cold roiled steel sheet and galvanised steel sheets.
Also on the list are: Roofing sheets, wheel barrows, head pans, metal boxes and containers, enamelware, steel drums, steel pipes, wires, rods, wire mesh, steel nails, security and razor wire, wood particles boards and panels, wood fiber board and panels, plywood boards and wooden doors.
Addressing newsmen in Abuja, Emefiele, said the items can be produced locally, noting that any importer who wants to continue importing the items should source forex from private sources.
Emefiele said that the huge importation cost is having serious drag on the country’s foreign reserve and creating massive unemployment.
This policy shift, he said, “is in line with our long held believe that Nigeria cannot attain it’s through potentials simply importing everything into the country.
“At some point in our lives we have to all decide that what we really want for our country. And I believe the time is now right for that deep and honest conversation”.
He noted that the CBN could no longer sit idly by and concentrate only on price and monetary stability, stressing that additional measures are required to identify productive sectors of the economy, to which credit would be channeled, while imposing proper monitoring and performance measures to ensure that the goals of increased employment and poverty reduction are attained.
He lamented that “despite Nigeria’s relatively impressive Gross Domestic Product (GDP) growth rate over the past seven years there seem to be an absence of a corresponding reduction in unemployment or poverty.