. As $39bn external reserves depleted in eight years
Due to the dogged implementation of the Central Bank of Nigeria (CBN) on foreign exchange restriction on 41 items, coupled with other forex policies in the last one year, there have been significant improvements in domestic production, while investments on most of those items have increased, Governor of the apex bank has disclosed.
However, excess forex wastages have been identified has the cause for depleting a whopping $39 billion from the nation’s forex buffers in the last eight years, while compared the balance of $62bn in September 2008 and $23bn in 2016.
In his keynote address at 2017 Bankers Dinner, organized over the weekend by the Chartered Institute of Bankers of Nigeria (CIBN), the CBN Governor, Mr. Godwin Emefiele, explained that owing to the bank’s FX restriction policy on certain items, many local manufacturers have reported major boosts to their revenue, while reducing unemployment rate in the country.
The CBN boss, in his speech entitled: “Policy Options for Sustaining Nigeria’s Economic Upturn,” cited Psaltry International Limited (PIL), an agro-allied manufacturing company based in Oyo, which produces starch, saying: “Before the policy, it had few customers and plenty of backlogged inventories. Today, PIL boasts over 50 multinational clients including Nestle and Unilever, among many others.
The company has saved Nigeria $7million in foreign exchange draw-down over the two years of the policy. This policy has even freed Nigeria from a perennially embarrassing import: toothpicks, as Baton Nigeria has also taken advantage of the policy and now producing high quality, a competitive toothpick that is 25 per cent cheaper than their Chinese competition.
“As most of you know may know, Unilever moved its blue band production facility to Ghana some years ago, which means that we have to import this product from that country, with scarce FX. But as part of the gains from our policy and in line with an agreement we reached with Unilever, the company will be commissioning a new Blue Band Factory in Agbara, Ogun State early next month.”
According to him, when we introduced a policy restricting 41 items from our FX markets, we were called all manners of names.
“Today ladies and gentlemen, among the benefit of that policy is the considerable decline in our import bills. From an average of about US$5.5bn, our monthly import bill has fallen consistently to US$2.1bn in 2016 and US$1.9bn by half year 2017. This is indeed commendable”, he stated.
He added that there is also a sharp drop in imports of rice from several countries, with data from the Thailand’s Rice Exporters Association indicate that in 2012, about 1.2 million Metric Tonnes of rice was exported to Nigeria.
However, in 2016, which was the first full year of implementation of the restricted forex policy, recorded fall in rice exports to Nigeria by 99 per cent to only 784 Metric Tonnes, noting that this is significant reduction in imports of rice from Thailand, while saving over US$600 million to Nigeria in 2016 alone.
“These are clearly verifiable successes of government’s attempts to create jobs locally, improve the wealth of our rural population, improve industrial capacities and ultimately attain economic growth in Nigeria”, he further explained.
It would be recalled that in September 2008, Nigeria’s FX Reserves hit a whopping US$6bn, even after the largest economy in Africa had spent about US$12bn settling her external debt obligations.
“Rather than build on the one-time burgeoning base of agricultural production and manufacturing we had, we invested less in power, infrastructure, education, and health. As our schools began to dilapidate and teachers went on incessant strikes, we sent our children overseas even for primary school education”, Emefiele lamented.
Earlier in his welcome address, President/Chairman of Council, CIBN, Prof. Segun Ajibola, pointed out that from January this year that inflation rate has consistently been declining, while the nation’s foreign exchange market has improved substantially from the official and parallel market.
He, also, talked about the recent Nigeria’s latest ranking in the World Bank’s report, which was an indication that the various policies of the Federal Government reforms and the CBN policies were producing results.
Barely a week ago, had the World Bank released its latest report, in which Nigeria achieved the unprecedented step of climbing 24 places in the rankings, and earning a place on the list of 10 most improved economies in the world.
Also, spoken at the event was the British Deputy High Commissioner, Ms. Laure Beaufils, who was the guest of honour and presented the Toast of the Federal Republic.
The CIBN, which is the organizer of the annual industry event, had brought top dignitaries from the banking and finance industries, the business community, members of the diplomatic corps and top government functionaries, including representative of the Lagos State Government, the State of Osun, among many others in attendance.
Stories Motolani Oseni