Nigeria’s external reserves have increased to 49 billion dollars, a development seen as reinforcing economic stability and supporting the Naira amid ongoing foreign exchange reforms.
Analysts say the consistent upward movement signals that policy measures introduced under President Bola Tinubu’s administration are beginning to deliver measurable outcomes.
According to the News Agency of Nigeria, the Governor of the Central Bank of Nigeria, Mr Yemi Cardoso, recently announced that the country’s reserves grew from 46.7 billion dollars to 49 billion dollars in February, reflecting a 4.93 per cent increase.
Cardoso described the improvement as a marked shift from the situation he met on assumption of office at the apex bank.
Economic analysts note that the stronger reserve position has started to moderate volatility in the foreign exchange market, curb speculative activities and enhance investor confidence.
They attribute the gains to increased inflows and stricter reform measures in the forex market.
A renowned economist, Prof. Ken Ife, told NAN on Sunday in Abuja that Nigeria’s rising reserves are strengthening the Naira, stabilising the forex market and opening up fresh growth prospects.
Ife, who serves as Lead Consultant on Private Sector Development to the ECOWAS Commission, said the improved reserve level is reinforcing confidence in the foreign exchange market.
He added that the outlook for the economy remains encouraging as reforms and sectoral investments gather pace.
According to him, growing production at the Dangote Petroleum Refinery will likely become a significant source of foreign exchange earnings, particularly from fertiliser, polypropylene, aviation fuel and gas exports.
“Dangote Petroleum Refinery alone is increasing output from fertiliser, polypropylene, as well as aviation fuel and gas.
“This could enable the company to earn about 20 billion dollars from exports to the global market,” he said.
He urged the Federal Government to maintain the pace of reserve accumulation while directing investments into priority sectors to enhance productivity and improve living standards.
Ife further noted that the stronger reserve position could create conditions for lower lending rates, thereby stimulating growth in productive sectors.
Dr Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), also praised the government’s efforts in boosting the reserves.
Yusuf said the development is already contributing to exchange rate stability and helping to moderate inflation.
“This is one of the reasons the exchange rate is getting stronger, and it is also helping to slow inflation,” he said.
He advised the government to sustain the progress by increasing oil output and expanding non-oil forex sources, especially diaspora remittances.
A Professor of Capital Market at Nasarawa State University, Prof. Uche Uwaleke, said that what is calledl reserves, particularly when they have come from the oil earnings, is already spent.
“it is already spent money in the sense that when you sell crude oil in foreign currency, that foreign currency is converted to Naira and then shared among the three tiers of government.
“It is important to also understand that the source of the increase is not just from the oil earnings.
“We have also seen increase by way of inflows, particularly portfolio investment. And we have also seen increase by way of loans.
“In the last one year, we have seen some increase in terms of foreign loans. When you get foreign loans, you put those in your reserves. So that is on the supply side,” he said.
Uwaleke added that reduced demand for dollars, especially for petroleum imports, has also supported the build-up.
According to him, when we have reduced the import of oil, which used to constitute a huge demand on the forex, we now see the accretion happening.
“The accretion is happening not only on account of supply, but also on account of demand.
“That is why the CBN governor was talking about forex reforms that have gone to nip in the bud, speculation.
“We now have the real demand for dollar, which is now on the downward trend,” he said.
He, however, stressed the importance of defining an optimal reserve level to avoid accumulating reserves without clear economic purpose.
“Let us determine what is the optimal.
‘When we get to that optimal point, whatever we have in excess, we can now use that to impact in the forex market to ensure that exchange rate comes down,” he said.
Some stakeholders argued that while external reserves are vital, they should not be seen as a standalone development strategy.
They maintained that overall economic performance should ultimately be assessed by improvements in citizens’ living standards.
A financial expert, Kunle Akinola, noted that foreign reserves, export earnings and foreign direct investment positively influence economic growth.
He said this suggests that increases in foreign reserves, export earnings and foreign direct investment would stimulate aggregate demand, drive investment and accelerate economic expansion.
