Blaming drop in crude oil prices, geopolitical tension among Nigeria’s critical trading partners and the effect of monetary policy regime of the United States Federal Reserve Bank, Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele has revealed that average inflows of foreign exchange into the apex bank has fallen by $2.3billion every month, over the last 26 months.
According to him, due to the sharp drop in oil prices, Federation Account Allocation to States have dropped by an average of about N2billion per state.
He lamented that Nigeria could have been better prepared for a time like this if the country did not open up the economy to all comers during economic boom and dropped all capital controls.
At some point he said, Nigeria received more than $23billion in hot money from foreign portfolio investors in a particular year. This fund according to him, was temporary as the owners quickly take them away at the slightest sign of economic slow growth.
Emefiele recalled that in September 2008, Nigeria’s foreign exchange (FX) reserves stood at $62billion “even after we have spent about $12billion settling our external debt obligation. What did we do with $62billion?.”
He regretted that at a time when crude oil price was at about N120 per barrel, the country could have saved the money.
“If we couldn’t save the money, we can Invest it in infrastructure, invest in industry; invest them in infrastructure and industry that would grow productivity and the wealth of our people,” he said.
Instead he emphasized, the Central Bank of Nigeria of that time went about licensing class ‘A’, class ‘B’, class ‘C’ bureau-de-change owned by powerful Nigerians.
“For class ‘A’ bureau-de-change, Central Bank was allocating $1million per week, for class ‘B’ bureau-de-change, Central Bank was allocating $750,000 per week, and for class ‘C’ bureau-de-change, Central Bank was allocating $500,000 per week to each bureau-de-change to the extent that between 2005 when central bank of Nigeria started selling dollar cash and 2016 January when we stopped it, the CBN had sold dollar cash of up to $66billion to BDCs. In 11 years, CBN allocated $66billion averaging $6 billion per year.
“Non of these were used to build factories and create jobs in Nigeria. Non of these were used to build hospitals in Nigeria. Imagine what this money could have meant to us if had that in our reserves today,” the governor regretted.
He stressed that due neglect of hospital and education sector, Nigerians travel abroad for ordinary medical check up and “we send our children overseas, even for primary school education; costing the country over $2billion per annum.”