Following the continued depletion of Nigeria’s external reserves as a result of dwindling crude oil prices and huge demand for the green back, experts in the nation’s financial sectors have stated that the federal government may sell its assets to foreign investors to shore up reserves.

Data released by the Central Bank of Nigeria (CBN) last Friday showed that the nation’s external reserves fell to $28.1 billion on January 28, the lowest level since 2005,

On December 31, 2015, the reserves closed at $29.070 billion, reflecting a decline of 15.79 per cent year-on-year (YoY) from $34.52 billion a year ago.
During the first 11 days of this year, the foreign reserves fell by $288 million, and stood at $28.782 billion on January 11.

This, the analysts who spoke to THISDAY on the condition of anonymity said, the situation can only be remedied by the sale of the assets.

Before the slide in the oil price, Chinese investors were said to have offered $70 billion for the Nigerian National Petroleum Corporation (NNPC) joint-venture interests.

However, analysts at FBN Capital stressed that the valuation of these assets would have since fallen sharply as a result of the decline in crude oil prices.

Speaking on how Nigeria got into this situation, the analysts blamed past governments for failing to build solid buffers when oil prices permitted.

According to the analysts, “Because their Nigerian counterparts failed to build solid buffers when oil prices permitted, they are struggling to contain the depletion of reserves now that foreign exchange inflows have slumped. Oil and gas, both dollarized exports, earned $90.5 billion in 2013, and transfers (remittances), the second largest source of inflows, $22.2 billion. We fail to see what could take up the slack before the oil price recovers.”

They added, “From a balance of payments (BoP) perspective, devaluation would not make much difference. A devaluation would boost certain non-oil exports, mostly agricultural, but these amounted to just $4.5 billion in total in 2013. Our chart puts gross inflows on the financial account into context.

In the four quarters from Q3 2012, when Nigeria enjoyed the feel good factor from the JP Morgan listing, gross portfolio inflows reached $21.2 billion, net portfolio flows $18.9 billion, and oil and gas exports $94.9 billion. For direct investment, the gross and net figures for the same period were $7.3 billion and $5.2 billion.”

The CBN had recently stated that with the continued depletion of the foreign reserves, providing forex to the BDCs was no longer sustainable.

The CBN Governor, Mr. Godwin Emefiele, had stated that between July 2014 and January this year, the country’s external reserves had suffered a great pressure from speculative attacks, round-tripping and front-loading activities by players in the foreign exchange market.

These, he pointed out, had led to a decline in the reserves from $37.3bn in June 2014 to $28bn currently.

Manufacturers and foreign investors have been calling for flexibility in the foreign exchange policies of the CBN as businesses continue to suffer from the restrictive policies of the central bank.

The Managing Director, International Monetary Fund (IMF), Christine Lagarde, had in a meeting with President Muhammadu Buhari earlier January stressed the need for flexibility with monetary policies in order not to deplete the reserves.

MansaMoussa:
Why are we making it sound like rocket science to run govt institutions..is the solution to corruption outright privatisation ? Russia's biggest Oil company is State-owned and they've been doing excellent work with Siberian Oil and Gas, and negotiating good deals for the motherland..
Why our matter different?
Probe the place and shoot the corrupt, bring in fresh blood and watch it grow.

odogwu125:

Incompetence and mediocrity are institutionalized and legalized in nigeria in d name of quota system and state of origin., unlike Russia

odogwu125:

Incompetence and mediocrity are institutionalized and legalized in nigeria in d name of quota system and state of origin., unlike Russia

StuntingBlack:
[b] Can someone please tell me the usefullness of our NNPC if I may ask? So far, observations till date only shows the NNPC as nothing but just a sack of disgrace of a federal institution that keeps failing to make any tangible impact in the life of the average Nigerian. Why then should selling this disgrace called NNPC be a problem for us? I'll rather NNPC be privatized than my life. At the very least, I stand to gain indirectly from a Chinese acquisition than from one incompetent government institution lacking integrity.

And though I may have voted Buhari with my thumbs, its quite foolhardy to keep pinning blames on the past administration (even though its a fact) rather than concentrate on resolving the current economic situation. Its already established Jonadunce is the incompetent and corrupt buffoon responsible for the current mess. But why keep blabbering over and over on the same thing instead of fixing issues?

Save words for later and address reality, oh ye APC friends!!!

[/b]

StuntingBlack:
[b] Can someone please tell me the usefullness of our NNPC if I may ask? So far, observations till date only shows the NNPC as nothing but just a sack of disgrace of a federal institution that keeps failing to make any tangible impact in the life of the average Nigerian. Why then should selling this disgrace called NNPC be a problem for us? I'll rather NNPC be privatized than my life. At the very least, I stand to gain indirectly from a Chinese acquisition than from one incompetent government institution lacking integrity.

And though I may have voted Buhari with my thumbs, its quite foolhardy to keep pinning blames on the past administration (even though its a fact) rather than concentrate on resolving the current economic situation. Its already established Jonadunce is the incompetent and corrupt buffoon responsible for the current mess. But why keep blabbering over and over on the same thing instead of fixing issues?

Save words for later and address reality, oh ye APC friends!!!

[/b]

Keneking:
Amazing

MansaMoussa:
Why are we making it sound like rocket science to run govt institutions..is the solution to corruption outright privatisation ? Russia's biggest Oil company is State-owned and they've been doing excellent work with Siberian Oil and Gas, and negotiating good deals for the motherland..
Why our matter different?
Probe the place and shoot the corrupt, bring in fresh blood and watch it grow.

RichFoundation:
Prodigal government.. keep on selling.

StuntingBlack:
[b] Can someone please tell me the usefullness of our NNPC if I may ask? So far, observations till date only shows the NNPC as nothing but just a sack of disgrace of a federal institution that keeps failing to make any tangible impact in the life of the average Nigerian. Why then should selling this disgrace called NNPC be a problem for us? I'll rather NNPC be privatized than my life. At the very least, I stand to gain indirectly from a Chinese acquisition than from one incompetent government institution lacking integrity.



And though I may have voted Buhari with my thumbs, its quite foolhardy to keep pinning blames on the past administration (even though its a fact) rather than concentrate on resolving the current economic situation. Its already established Jonadunce is the incompetent and corrupt buffoon responsible for the current mess. But why keep blabbering over and over on the same thing instead of fixing issues?

Save words for later and address reality, oh ye APC friends!!!

[/b]

StuntingBlack:
[b] Can someone please tell me the usefullness of our NNPC if I may ask? So far, observations till date only shows the NNPC as nothing but just a sack of disgrace of a federal institution that keeps failing to make any tangible impact in the life of the average Nigerian. Why then should selling this disgrace called NNPC be a problem for us? I'll rather NNPC be privatized than my life. At the very least, I stand to gain indirectly from a Chinese acquisition than from one incompetent government institution lacking integrity.

And though I may have voted Buhari with my thumbs, its quite foolhardy to keep pinning blames on the past administration (even though its a fact) rather than concentrate on resolving the current economic situation. Its already established Jonadunce is the incompetent and corrupt buffoon responsible for the current mess. But why keep blabbering over and over on the same thing instead of fixing issues?

Save words for later and address reality, oh ye APC friends!!!

[/b]

odogwu125:

Incompetence and mediocrity are institutionalized and legalized in nigeria in d name of quota system and state of origin., unlike Russia