External Reserves Hit Four-year High of $38.2bn on the Back of Eurobond Issue

Godwin Emefiele
The CBN governor, Mr. Godwin Emefiele

• CBN to draft credit framework for SMEs, pumps $210m into FX market

Obinna Chima

Following the success of the $3 billion Eurobond issue by the federal government last month, coupled with higher oil prices and production, the Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, has disclosed that the country’s external reserves have hit a four-year high of $38.2 billion.

Emefiele made the disclosure Tuesday during the inauguration of a €10 million fully automated Blue Band margarine factory by Unilever Plc, in Agbara, Ogun State.
With the rate of accretion, the reserves are expected to meet the central bank’s projection of $40 billion by the end of 2017.

Emefiele said: “In January 2014, Nigeria’s reserves were about $40 billion and by October 2016, it had dropped to $23 billion, all because of the haemorrhaging of foreign exchange.

“But I am happy that today, we are beginning to sing positive songs and our story is looking good at this time. We have seen reserves move up from the $23 billion to $38.2 billion.”
The CBN governor commended the management of Unilever for heeding his call for manufacturers to look inwards to grow the economy.

The establishment of the factory, according to him, was a fallout of the central bank’s policy that restricted 41 items from accessing FX from the interbank market.
He stressed the need for the country to focus on job creation to cater for Nigeria’s rising population and create job opportunities for Nigerian youths.

He also emphasised on the need for private sector support, saying government alone cannot create jobs.
Emefiele went on to recall how Unilever was encouraged to establish the Blue Band margarine factory after it was faced with the ban on the 41 items that included margarine.
“I must thank Unilever for doing what they have done today. The restriction of FX for the 41 items came on board about two years ago. At that time, we were criticised.

“Before that time, Unilever had a factory producing Blue Band margarine. But margarine was also part of the 41 items. The managing director and the executive team of Unilever Nigeria visited me in Abuja and said they wanted us to grant them some form of forbearance.
“I said there was not going to be any forbearance and encouraged them to re-establish the factory in Nigeria, because at the time their factory had been dismantled in Nigeria and taken to another country.

“And he (Unilever managing director) made a promise that between 12 to 18 months the factory would be re-established in Nigeria,” he recalled.
According to him, based on the promise by Unilever’s management, the central bank granted the company some form of forbearance that made it easy for them to import margarine into Nigeria for a period.

He noted that the CBN kept monitoring the company to ensure that they did not renege on their promise, adding: “I must say that the managing director of Unilever is a man of his word and he kept to the promise that he was going to re-establish that factory.

“The entire essence is to say that by re-establishing that factory here in Nigeria, he is creating direct jobs for Nigerians in this factory and creating indirect jobs for Nigerians by virtue of the fact that he will buy palm oil which is the key ingredient that he uses in producing margarine.”

He expressed the readiness of the central bank to support any firm that wants to establish a company in Nigeria.
“I keep saying we do not have the foreign exchange to allocate to import products that can be produced in Nigeria. I am happy that Unilever has proved us right that Blue Band margarine can be produced in this country.

“So far, they are doing about 10,000 metric tonnes per annum and he has promised that he is going to ramp it up to 50,000 metric tonnes.
“By doing so, you create jobs, which is what we are talking about. By creating jobs, you save the country FX that is needed to create jobs,” he said.

Going down memory lane, Emefiele said when he drove past the Agbara industrial estate in Ogun State, he passed some of the companies he had visited as a young credit officer as a banker, but they were all closed down.
“At that time, Unilever was producing Blue Band margarine. The company that was producing glass has shut down, also the fluorescent companies have closed down.

“But the promise I am making to everybody, just as I made to Unilever, is that if there is any company that wants to set up shop in any part of this country, we will do all we can to assist it.
“If you want to re-establish your factory and you need our funding assistance, count on us to support you. Like I said, creating jobs is not just the responsibility of the central bank, we need support from the private sector and that is why we are making the promise that if there is an investor that is ready, he should count on us,” he said.

Earlier, the executive vice-president, Unilever Nigeria and Ghana, Mr. Yaw Nsarkoh, restated the commitment of the multinational to Nigeria. According to Nsarkoh, in spite of the fact that the company has been in Nigeria for over 90 years, the past few years had been the best.
According to him, the new plant consumes 50 per cent energy less than what the company’s previous plant, but produces a higher output.

“None of these would have been possible without the support of the central bank. In the face of the forex scarcity, the central bank continued to support Unilever and I want to thank you (Emefiele) for embarking on this journey with us,” he added.
The CBN Tuesday also announced that it was formulating a draft credit framework for Small and Medium Enterprises (SMEs) aimed at improving credit to the sector.

According to a statement posted on the central bank’s website, this was disclosed by Emefiele at a strategy meeting with select Development Finance Institutions (DFIs) and other stakeholders on enhancing access to credit to SMEs in the country.
According to him, the efforts would see more government intervention in the sector, resulting in job creation for youths in the country.
Emefiele noted that the meeting with the DFIs was as a result of the failure of lenders to make access to credit a priority.

He conveyed the government’s concern that the citizens were yet to feel the impact of the country’s exit from the recession, which he attributed to lack of appreciable growth.
Speaking further, he disclosed that President Muhammadu Buhari had mandated agencies to come up with programmes that would have Nigeria and Nigerians at heart.
The programme, according to him, would be one that would be impactful nationwide in terms of granting access to credit to the rising number of SMEs.

In spite of all efforts by the Bank to improve certain parameters of the economy, he said Nigerian lenders had failed small businesses.
Speakers at the strategy session were unequivocal in their attempt to find solutions to the failure of the commercial banks to extend credit to SMEs.

The representative of the only commercial bank at the meeting, First Bank of Nigeria, however, said everything boils down to the huge risks involved in giving credit to SMEs.
An Abuja-based manufacturer narrated how a commercial bank turned down his request for a loan of N160 million on the account of his N200-million factory that was located in Kubwa, on the outskirts of the Abuja metropolis.

Rounding off the discussion, Emefiele observed that the nation needed to strengthen the Bank of Industry (BoI) in order to make it compete favourably with commercial banks in the country.

A technical committee comprising the BoI, Development Bank of Nigeria (DBN), select DFIs, Bank of Agriculture (BOA) and the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), to be chaired by the Director, Development Finance Department (DFD), Dr. Mudashiru Olaitan, was constituted and asked to submit its recommendations to the larger meeting in one week.

Emefiele said that the outcome of the committee’s work should form part of the theme of the annual Bankers’ Committee retreat in Lagos, scheduled to hold between 8 and 9 December 2017.
Those who attended the meeting included the Special Adviser to the President on Economic Matters in the Vice President’s Office, Dr. Adeyemi Dipeolu; Managing Director, DBN, Mr. Tony Okpanachi; and Managing Director, BoI, Mr. Olukayode Pitan.

Meanwhile, the CBN said Tuesday that it injected an additional $210 million into the foreign exchange market on Monday, in its bid to sustain liquidity.
Giving a breakdown, central bank spokesman, Mr. Isaac Okorafor, said the sum of $100 million was offered to the wholesale segment, while the SME segment got $55 million.
The Invisibles segment (i.e. tuition fees, medical payments and basic travel allowance, among others) was also allocated $55 million.

He said that the releases to successful bidders, which had been concluded were part of efforts aimed at further enhancing ease of doing business in Nigeria.
Hence, besides boosting liquidity in the FX market, facilitating trade and remittances for legitimate personal commitments were also expected to improve tremendously.

Speaking on the market conduct, Okorafor enjoined authorised dealers to abide by the extant rules of the market, as CBN would continue to monitor the market.
The naira maintained its value against the dollar, exchanging for N361/$1 on the BDC segment of the market Tuesday.

However, the official exchange rate of the naira appreciated to N306.85 to the dollar Tuesday, stronger than the N307 to the dollar from the previous day.

  • Dauda

    Thank you for the 3 million jobs. I will eat the reserve. I do not have time with the everyday borrowing

  • oyoko

    up Buhari! even at $58/b you are saving. At $130/b we could not save $1, but went on to consume, swallow, steal, embezzle and reduce the reserve that was at $68Billion when they came in to $33Billion when they were chase away by Nigerians. Unfortunately for gullible mind and zombies, they are out there telling us that they must capture Aso Rock in 2019. I weep for my beloved country, Nigeria!

    • William Norris

      Did you read that part of that foreign reserve came from BORROWED MONEY?


      1. there’s still no stable electricity
      2. Rice has tripled in price since 2015
      3. Price of fuel has doubled…and fuel scarcity has started again
      4. Corruption is riding high…Maina, Grasscutters, $24 billion NNPC contract scam, IDP aid stolen AND Buhari still hasn’t declared his assets.
      5. Boko Haram still on the rampage

      That’s CHANGE

      • kinsly

        Which part of the report? A fool is always a fool. PDP criminal e-rat.

  • Daniel Obior

    Accumulate more debts to build up reserves, with no substantial development on the ground to show. What a fantastic policy from a fantastically corrupt government!

    • I don’t get it. What part of the write-up is it that you do not understand. How does one borrow to save?? The governor said 41 banned items among others hemorrhage the reserve in 2014, and you are here with your negative mind spewing trash. If you do not understand, why not ask ?

      • Admonisher

        He is partially right. The Eurobond issue and hot money FDI are some of the minor reasons why the Forex reserves appreciated . The major reason though is oil prices.
        Nigeria actually has far better economic management under Buhari than the hapless Jonathan government.

        • Pluti

          Yes the internal efficiencies and that cant be possible without having a good road transportation network and rail system

        • William Norris

          1. there’s still no stable electricity
          2. Rice has tripled in price since 2015
          3. Price of fuel has doubled…and fuel scarcity has started again
          4. Corruption is riding high…Maina, Grasscutters, $24 billion NNPC contract scam, padded budgets, IDP aid stolen AND Buhari still hasn’t declared his assets.
          5. Boko Haram still on the rampage

          That’s CHANGE

          • kinsly

            Fool! Buhari declared his assets long time ago. Try to Google it to teach yourself. Okpo.

          • William Norris

            No he did NOT.

            He was too busy seeking treatment in London whole the mega billion Aso Rock Clinic is left to rot.

            We understand he was too sick to count his the $2.8 billion he stole in 1978. Accept my sympathy.

          • share Idea

            Please share a link where his assets declaration can be found. What was shared to the public was a list by Shehu that reads in the line…several cars, and promised to make it public once that is verified by CCB.

            The gullible like you have been deceived while the discerning minds are waiting for another white lies from lying patron.

          • Tunde

            1. Electricity is much better than during GEJ
            2. Thailand has closed rice factories and Cotonou is sweating because this govt has increased rice production
            3. Subsidy stealing has stopped and fuel scarcity does not happen 3 times a year like in PDP GEJ govt
            4. Maina has been sacked and was not paid 1 kobo from this govt, grass cutter has been sacked, $24b contract a red herring, no more Ghana must go bags to pass budget as in PDP govt.
            5. Boko Haram attack’s reduces to less than 10 a month from high levels during PDP.

            Those are the facts! Rome was not built in a day, nor was it built by a perfect team. PMB for 2019!

          • William Norris

            Yeah, Buhari CHANGED fuel subsidy stealing to FOREX round tipping corruption.

            Tell us who benefits from CBN having a 305 rate while black market rate is 365.

            Fuel scarcity is happening right now all over the place, TODAY.

            I hope BMC is paying good money, you’re very enthusiastic.

            I hope they pay you enough to get university degree in London like all Buharis’s children.

      • Daniel Obior

        You are daft and have chosen the little aspect you seem interested in. Let me ask you a couple of simple questions. Has the total debt of this country not risen from less than $10 billion before this incompetent government took over, to over $60 billion presently? While the government is boasting about increased reserves, isn’t that accumulating debt to build up reserves? Why would I expect a dunce like you to understand what I say?

        • Admonisher

          National debt under Jonathan was $65bn. A lot of it was local debt . Buhari has only increased capital project related debt.

          • kinsly

            Teach the blockhead.

          • Daniel Obior

            Liars of the same plumage.

          • Daniel Obior

            Another liar.

          • FrNinja

            The Nigerian government has run a deficit in almost every single year since 2009 including under the Buhari. The FGN has also played the role of father christmas:

            – Bailing out banks – Bank NPLs was shifted to the government under AMCON and represents an ADDITIONAL 4-5 trillion or $12 billion aside the $65 billion.

            – FGN provided 800 billion or more to states to pay salaries.

            – FGN provided 700 billion to power companies

        • oyoko

          i wonder what you people are doing in that oyibo land. you ran away from your Nigeria, because you could not compete with us, one expected that with the new environment you find yourself, you should have been reformed and have a well formed analytical mind. Go and ask Dangote what is his company debt profile, go and ask USA what is their debt profile, then you will get answer to your question. My problem is that i used to think some of us are educated, but when i read the way we reason with what we advance in SM, i wonder, i just wonder!

          • Daniel Obior

            First you show how daft you are. How do you know where I am? Such stupid speculation as to where I am located, indicates you should not be taken seriously, in the first place. Secondly, you mentioned the debt profile of the US. The US economy is the most developed economy in the world. There is the capacity and capability to repay their debts, with time. In comparison, where is the level of Nigeria’s economy, a mono economy that depends on a disproportionately high importation of goods and services? Common sense should have indicated to you that you are comparing oranges and banana. Of course, common sense is not common, as you appear not to have it.

          • oyoko

            see how clueless you are; you believe that USA has the capacity to pay their debt, but your beloved country cannot, therefore you go about discrediting Nigeria before your oyibo people that your people are useless, your people are monkeys, your nation, Nigeria is mono-economy that can not grow, nothing good can come out of Nigeria. Nonsense! common sense will tell you that the strength of your foreign reserve determine how strong you are as a nation and build confidence to investors. with huge debt profile of USA, they are still one of the best economy in the world, because of their huge foreign reserve. pls go and study and get informed, and stop this beer parlour understanding.

          • Daniel Obior

            I believe in facts not misguided by sentiments. The US is capable of paying its debt based on the level of development and economic production. Truth must be told, my beloved country cannot pay the debt it is accumulating as an undeveloped country with weak economy. Since your poor memory has failed you, let me remind you that the last time, we were unable to pay the loans we owed the Paris Club, until we negotiated debt forgiveness. Of what use is a huge foreign reserve to Nigeria when we owe twice as much? You have your brain in your a*se, therefore little wonder your pedestrian level of reasoning, which defies basic logic. Common sense is indeed not common.

        • kinsly

          Our external and domestic debt is less than $35billion, go back to your beer parlour. Hate and wailing equals to stupidity.

          • Daniel Obior

            You are a liar.

      • Ayorinde Dawotola

        don’t waste your time replying GEJ boys. After GEJ wasted the $66bn left in the reserves by OBJ, sharing same with his pple, what do you expect Dan Obior to say. To him that is loyalty to GEJ…home boy

      • Chuma Anierobi

        What is Aigeria`s reserve?

        • kinsly

          Why didn’t you ask this question during the presidency of your lovely ‘JONA the thief’?

        • FrNinja

          Algeria reserve is around $100 billion with $3 billion external debt and $32 billion local debt.

      • Tunde

        Abi o! They cannot see the woods from the trees because corrupt money is no longer flowing! Enemies of the nation!

        • FrNinja

          Corrupt money is no longer flowing in NNPC? Its no longer flowing to those importing petrol while refineries rot away in anticipation of Dangote’s FGN monopoly? Its no longer flowing in all the Abokis getting dollar at 280 and selling at 365. Its not longer flowing in grass and security contracts? OK.

    • Don Gratias

      That is if the money is not left for Baru, Abba Kyari and the one with 64 children Maman Daura to be stolen and pillaged

    • kinsly

      Go back to school. Okpo.

      • Daniel Obior

        Go lick Buhari’s a*se.