Experts predict that once foreign inflows into Nigeria start, the country’s external reserves will rise quickly.
Nigeria’s foreign reserves have increased by 2.19 percent every month as a result of continuous inflows of dollars from global financial institutions.
External reserves increased from $32.447 billion on May 10, 2024, to $33.159 billion on June 11, 2024, according to data from the Central Bank of Nigeria (CBN).
To promote industrialization, the Federal Government (FG) has obtained a $3 billion Afreximbank financing.
A Memorandum of Understanding (MoU), signed during the recently ended Afreximbank Annual Meetings (AAM) 2024, formalized the historic deal.
Nigeria was represented at the signing ceremony by Minister of Industry, Trade, and Investment Doris Udoka-Anite. The goal of this project was to create a Nigeria Industrialization Financing Facility that would aid in the growth of industrial parks, special economic zones, and the country’s light manufacturing industry.
The World Bank this week authorized a $2.25 billion loan for Nigeria to increase aid to the impoverished and stabilize the economy after reforms.
According to Yemi Kale, managing director of research and international cooperation at Afreximbank and group chief economist, borrowing is solely intended to address short-term issues.
“However, you need to design a framework that ensures a steady stream of foreign currency after that,” he stated.
The recent gain in external reserves is mostly attributable to a growth in foreign portfolio investments, crude oil output, and foreign loans, according to Uche Uwaleke, special assistant to the chairman of the Senate Committee on Banking, Insurance, and Other Financial Institutions.
“The level of external reserves will likely plummet as the portfolio investments mature and the Federal Government’s obligations to foreign creditors kick in after the period of moratorium,” Uwaleke continued, “unless improvement in crude oil production is sustained.”
According to data from the FMDQ Securities Exchange Limited, the dollar supply by willing buyers and willing sellers climbed by 13.47 percent to $183.47 million on Friday, June 15, 2024, from $161.69 million as of June 10, 2024.
The naira gained 0.06 percent at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Friday, closing flat. The dollar was quoted at N1,482.72 on June 15 compared to N1,483.62 closed on June 10, 2024.
On Thursday, the Nigerian National Petroleum Company (NNPC) Limited-sponsored syndicated $3.3 billion crude oil-backed prepayment facility saw the additional transfer of $925 million from the African Export-Import Bank (Afreximbank). This raises the facility’s overall funded size to $3.175 billion.
The industrialization facility’s comprehensive plan calls for the establishment of industrial, agro-processing, and special economic zones, which are projected to create 20,000 new employment. The facility will put special emphasis on developing the automotive industry and the value chain for compressed natural gas (CNG), which is crucial for the development of the nation’s transportation and automotive sectors.
The financing package includes financial and technical support for the diaspora investment fund architecture as well.
It also denotes a strong collaboration to revitalize Nigeria’s cotton, apparel, and textile value chain between Afreximbank, Nigeria’s Ministry of Industry, Trade and Investment, and Arise Integrated Industrial Platforms (Arise IIP).
Designed, funded, constructed, and run by Equitane and the Africa Finance Corporation (AFC), Arise IIP is an integrated industrial park initiative. It is anticipated that this partnership will bring in over $2 billion in investments and provide a large number of job opportunities, strengthening Nigeria’s commitment to economic diversification.
The historical significance of this project was underscored by Afreximbank, which stated, “This will cut across Nigeria’s cotton belt and also create a lot of jobs in Nigeria’s core strength in terms of cotton and textile production, which used to be the pride of the country in the 1980s and 1990s. Thus, to complete that, we are bringing it back and cooperating,” it stated.
