Wale Edun, the Coordinating Minister of the Economy and Minister of Finance, claims that since January 2024, Nigeria’s foreign reserves have grown by $4 billion. During a $500 million Federal Government bond issue investor meeting in Lagos, Edun emphasized that the Federal Government’s Revenue has doubled as a result of the adoption of strict fiscal policies and reforms meant to improve Tax collection. The Central Bank of Nigeria (CBN) reported that as of July 2024, the nation’s foreign reserves stood at $35.05 billion.
To ensure that foreign cash is continuously flowing into Nigeria, the CBN also intends to treble remittances from the diaspora. The good economic developments, according to Edun, can be attributed to President Bola Tinubu’s macroeconomic reforms, even though he pointed out that these changes’ advantages frequently come after their early difficulties. About five million individuals have benefited from direct payments given to one million households. A Minimum Wage of ₦70,000 will be implemented by the government, coupled with wage changes for specific government personnel, and small enterprises will also get funding at an annual Interest Rate of 9%.
The nation’s foreign reserves were $36.4 billion in January 2022.
Prior to the latest economic reforms, Nigeria was confronted with a number of serious economic issues, such as dwindling foreign reserves, rising inflation, and currency depreciation. Because oil is a significant source of government revenue, declining oil prices and production have caused the nation’s foreign reserves to plummet to $30.08 billion by January 2023—the lowest level in previous years. The nation also suffered from high debt levels, ongoing unemployment, and an import-dependent economy that put pressure on its foreign exchange reserves.
More so, the COVID-19 epidemic, which resulted in a worldwide economic slowdown and decreased remittances from the Nigerian diaspora, made the situation even worse. The nation’s foreign reserves were $36.4 billion in January 2022, but by December of the same year, they had decreased to $32.52 billion, according to figures from the Central Bank of Nigeria (CBN). Compared to the peak of $47.5 billion in 2018, there was a notable decrease. Nigeria’s external reserves are under strain from rising import demand and repaying foreign debts, according to the CBN’s Annual Economic Report for 2022.
There are problems and objections to the macroeconomic reforms.
Nonetheless, the reserves have seen a good trajectory as a result of the recent fiscal changes, reaching $35.05 billion by July 2024—a $4 billion rise since January 2024. Increased inflows from non-oil sectors and stricter foreign exchange management regulations are blamed for this surge. Former Nigerian Statistician-General Dr. Yemi Kale offered the following analysis of the latest events: “The country’s budgetary policies are starting to show results as evidenced by the expansion in Nigeria’s foreign reserves. But maintaining this momentum will call for regular policy implementation and oversight.”
Likewise, Amina Yusuf, a small company owner who benefited from low-interest loans from the government, described her experience, saying, “The 9% interest rate on the Loan I received has allowed me to expand my business and hire more staff, which would have been impossible with Commercial Bank rates.” There are problems and objections to the reforms notwithstanding the encouraging developments. Government actions, according to critics, have not entirely mitigated the immediate pains associated with the macroeconomic reforms, which include greater living expenses and inflation.
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As a result of the depreciation of the Naira and the withdrawal of fuel subsidies, the World Bank reported that concerns had been raised about the Inflation rate, which had increased from 18.6% in June 2022 to 24.08% by July 2024. In addition, there are issues with the implementation of the ₦70,000 minimum wage law in all states, particularly those with less robust fiscal capacities, even though it is a positive move. The government’s ability to maintain the pay adjustments in light of the current economic climate has also been questioned by a few labour organizations.