To address the economic challenges caused by the removal of fuel subsidies, financial analysts have outlined vital steps that the Nigerian government must take to strengthen the country’s external reserves. These experts shared their insights in separate interviews with NAN in Lagos.
According to economists, one crucial measure to enhance the nation’s foreign reserves is significantly increasing the export of natural gas and agricultural products. Prof. Sherifdeen Tella, the Head of the Economic Department at Olabisi Onabanjo University (OOU), emphasized the need for macroeconomic policies that support the expansion of gas production in the country. He stated that tapping into the vast gas reserves available in Nigeria can fuel economic growth and generate foreign exchange.
Tella further emphasized the importance of prudent financial management within revenue-generating agencies to curb leakages. Implementing automation systems in these agencies is essential to prevent financial losses, bolster the country’s external reserves and reduce the fiscal deficit.
Uju Ogubunka, former Executive Secretary of the Chartered Institute of Bankers of Nigeria (CIBN), highlighted the significant revenue potential of agricultural exports, particularly cash crops. He recommended prioritizing the cultivation and exportation of these crops to leverage Nigeria’s comparative advantages and contribute to domestic economic growth. Ogubunka also stressed the importance of adding value to agricultural products through processing, as this would command higher prices in international markets and enable the government to reinvest in the sector’s value chains.
Boniface Okesie, President of the Progressive Shareholders Association of Nigeria (PSAN), urged the government to ensure the efficient operation of domestic petrochemical plants to strengthen the external reserves. He emphasized the need for continued support and completion of privately owned petroleum refinery plants, which would enhance domestic capacity and reduce the demand for costly imports. Okesie suggested that once self-sufficiency is achieved, Nigeria could explore exporting petroleum products to neighbouring West African countries, generating additional revenue.
Recent data from the Central Bank of Nigeria (CBN) reveals a decline in the nation’s external reserves, reaching $35.23 billion as of May 9. Over the past year, foreign exchange inflows, primarily from oil sales, have decreased, resulting in a 10.52% ($4.15 billion) reduction in external reserves. The decline continued in the first quarter of this year, with approximately $1.82 billion lost, which has weakened the CBN’s ability to support the Naira’s value.