Nigeria’s Depleting Reserves



As experts have begun raising alarm over Nigeria’s depleting foreign reserve, it has become one area that the Goodluck Jonathan administration has a question to answer and this bothers on effective management of the reserve.

According to the Central Bank of Nigeria, the country’s foreign reserves, which stood at US$68 billion in August 2008 before the global financial crisis which impacted on it, fell to US$37 billion on 4 July, 2010.

In October 2010, the reserves was again depleted by the government to stand at $33.9 billion. By the end of January 2011, it had dropped yet again to $33.12 billion.

Nigeria’s foreign reserves, going by the latest data on the CBN website, dropped to US$32.5 billion in August from US$35.2 billion as at 11 July.

The analysis is a reflection that apparently, in the last one year, the nation’s foreign reserves has plummeted to almost 50 per cent, thus raising concerns about the Jonathan administration spending habit especially during the election year.

In the same vein, as at 2007 when the late Umaru Yar’Adua was in office, the excess crude account stood at $17.3 billion, but it continued to decline steadily until the Senate shouted when the account became a paltry $200 million.

The effect of this mishandling and withdrawals from the reserves and the excess crude account came from Fitch rating when the world class financial consulting firm lowered its country rating for Nigeria from BB- to negative in October last year.

To Nigerians, this is a further attestation to the lamentation of citizens of the country that the federal government, as constituted today, lacks serious direction. It also shows that the government never practices what it preaches.

It is also distressing that where the government is preaching financial prudence to the citizens, it is engaging in unscrupulous withdrawal of huge sums of money saved for the country by previous administration and, yet, has nothing to show for it.

The people are getting more worried at the irony of depleting foreign reserves when the nation should be growing its reserves with the rising oil price at the international market.

If the performance of the 2010 budget was less than 40 percent, then what happened to all the money appropriated for the year and the heavy withdrawal from the two accounts?

While proffering answers to the puzzle it has created, the government should concentrate more on producing domestic products that will impact on the reserves instead of importing most commodities.