Economy
Concerns Grow as Nigeria’s Foreign Reserves Decrease to $38.3bn
By Dipo Olowookere
**May Drop to $37bn in Few Days’ Time
**Shed $4.5bn in 2019, $306m So Far in 2020
**Dangote Fears Devaluation Imminent
**No Cause for Alarm—CBN
Though the Central Bank of Nigeria (CBN) has said Nigerians should not panic over the gradual decline in the foreign reserves, observers have cautioned both the fiscal and monetary authorities not sleep with their eyes closed because it might spell doom for the country.
This is because if the depletion of the reserves continues with the steady fall, the nation, which is Africa’s largest economy, may fall into another recession under the administration of President Muhammadu Buhari.
During his first term in office as a civilian leader of the country, just after a year he was sworn into office in 2015, Nigeria went into an economic recession. However, a year later, 2017, Mr Buhari and his team led the nation out of the crisis.
One of the main reasons for sliding into recession was a decline in the price of crude oil at the global market coupled with decline in the volume of the commodity produced.
The period was when restive Niger-Delta youth were attacking oil facilities in the oil-rich region, making it difficult for Nigeria to meet its daily production, resulting into lesser revenue from the sale of crude oil, the country’s main source of foreign earnings.
But when federal government held meetings with stakeholders from that part of the country, the attacks reduced and Nigeria started producing up to 1.7 million barrels per day, resulting into more money.
In 2019, the average price of crude oil at the international market was around $59 per barrel, while the benchmark for the country’s budget was $55 per barrel. This year, the benchmark was put at $60 and the price has remained around $63 to $65.
But despite the excess recorded from the sale of crude oil last year, the external reserves have been reducing, making some observers to raise concerns, urging the central bank to do something fast to prevent a devaluation of the Naira, which the present government does not support.
Business Post reports that the apex bank has been taking from the reserves to support the local currency, making it stable around N360 per Dollar at most of the various segments of the foreign exchange market.
For example, at the beginning of a new week, the CBN regularly releases the sum of $210 million to the forex market, with wholesale sector normally getting $100 million, the Small and Medium Enterprises (SMEs) and the invisible segments receiving $55 million each. At the end of the week, it also injects over $200 million into the Retail Secondary Market Intervention Sales (SMIS).
These interventions have contributed to the decline in the country’s reserves and the central bank has promised not to stop defending the Naira so as to avert currency speculations, which pushed the local currency exchange rate to over N500 to a Dollar over three years ago.
According to data obtained by Business Post from CBN, Nigeria’s external reserves have dropped about $306.1 million since the beginning of this year to $38.3 billion as at Friday, January 10, 2020.
In 2019 alone, the reserves depleted by $4.5 billion, depreciating to $38.6 billion at December 31 from $43.1 billion at January 2, 2019.
In November 2019, Business Post reported that Governor of the CBN, Mr Godwin Emefiele, told some potential investors in London, United Kingdom, that the devaluation of Naira would only be possible if the nation’s external reserves go below $30 billion and the international price of crude oil drops to $45 per barrel.
In 2017, President of Association of Bureau de Change Operators of Nigeria (ABCON), Mr Aminu Gwadabe, said Mr Emefiele assured his members that the bank had no intention to devalue the Naira.
But Africa’s richest man, Mr Aliko Dangote, is already planning ahead of a possible devaluation of the Nigerian Naira by the CBN.
He recently told Mr David Rubenstein of Bloomberg TV that in order not to be caught off guard, he was considering getting an office space in New York, United States of America, to protect the wealth of the family, expressing concerns that a devaluation of the currency may weaken his local investments.
“In Africa, you know we have issues of devaluation, so we want to really preserve some of the family’s wealth,” Mr Dangote, 62, was quoted as saying on the David Rubenstein programme, noting that the office space in New York will help to diversify his business and avoid the risk of currency fluctuations on his home continent.
By Adedapo Adesanya
The Lagos Chamber of Commerce and Industry (LCCI) has noted that the N15.52 trillion allocation to debt servicing in the 2026 budget remains a significant fiscal burden.
LCCI Director-General, Mrs Chinyere Almona, said this on Tuesday in Lagos via a statement in reaction to the nation’s 2026 budget of N58.18 trillion, hinging the success of the 2026 budget on execution discipline, capital efficiency, and sustained support for productive sectors.
She noted that the budget was a timely shift from macroeconomic stabilisation to growth acceleration, reflecting growing confidence in the economy.
She lauded its emphasis on production-oriented spending, with capital expenditure of N26.08 trillion, representing 45 per cent of total outlays, and significantly outweighing non-debt recurrent expenditure of N15.25 trillion.
According to Mrs Almona, this composition supports infrastructure development, industrial expansion, and productivity growth.
However, she explained that the N15.52 trillion allocation to debt servicing underscored the need for stricter borrowing discipline, enhanced revenue efficiency, and expanded public-private partnerships to safeguard investments that promote growth.
She added that a further review of the 2026 budget revealed relatively optimistic macroeconomic assumptions that may pose fiscal risks.
“The oil price benchmark of $64.85 per barrel, although lower than the $75.00 benchmark in the 2025 budget, appears optimistic when compared with the 2025 average price of about $69.60 per barrel and current prices around $60 per barrel.
“This raises downside risks to oil revenue, especially since 35.6 per cent of the total projected revenue is expected to come from oil receipts.
“Similarly, the oil production benchmark of 1.84 million barrels per day is significantly higher than the current level of approximately 1.49 million barrels per day.
“Achieving this may be challenging without substantial improvements in security, infrastructure integrity, and sector investment,” she said.
Mrs Almona said the exchange rate assumption of N1,512 to the Dollar, compared with N1,500 in the 2025 budget and about N1,446 per Dollar at the end of November, suggests expectations of a mild depreciation.
She said while this may support Naira-denominated revenue, it also increases the cost of imports, debt servicing, and inflation management, with broader macroeconomic implications.
The LCCI DG added that the inflation projection of 16.5 per cent in 2026, up from 15.8 per cent in the 2025 budget and a current rate of about 14.45 per cent, appeared optimistic, particularly in a pre-election year.
She also expressed concern about Nigeria’s historically weak budget implementation capacity, likely to be further strained by the combined operation of multiple budget cycles within a single year.
Looking ahead, Mrs Almona identified agriculture and agro-processing, manufacturing, infrastructure, energy, and human capital development as key drivers of growth in 2026.
She said that unlocking these sectors would require decisive execution—scaling irrigation and agro-value chains, reducing power and logistics costs for manufacturers, and aligning education and skills development with private-sector needs.
The LCCI head stressed the need to resolve issues surrounding the Naira for crude, increase the supply of oil to local refineries to boost local refining capacity and conserve the substantial foreign exchange used for fuel imports.
“Overall, the 2026 Budget presents a credible opportunity for Nigeria to transition from recovery to expansion.
“Its success will depend less on the size of allocations and more on execution discipline, capital efficiency, and sustained support for productive sectors.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited witnessed Santa Claus rally on Wednesday after it closed higher by 0.12 per cent.
Strong demand for Nigerian stocks lifted the All-Share Index (ASI) by 185.70 points during the pre-Christmas trading session to 153,539.83 points from 153,354.13 points.
In the same vein, the market capitalisation expanded at midweek by N118 billion to N97.890 trillion from the preceding day’s N97.772 trillion.
Investor sentiment on Customs Street remained bullish after closing with 36 appreciating equities and 22 depreciating equities, indicating a positive market breadth index.
Guinness Nigeria chalked up 9.98 per cent to trade at N318.60, Austin Laz improved by 9.97 per cent to N3.20, International Breweries expanded by 9.85 per cent to N14.50, Transcorp Hotels rose by 9.83 per cent to N170.90, and Aluminium Extrusion grew by 9.73 per cent to N16.35.
On the flip side, Legend Internet lost 9.26 per cent to close at N4.90, AXA Mansard shrank by 7.14 per cent to N13.00, Jaiz Bank declined by 5.45 per cent to N4.51, MTN Nigeria weakened by 5.21 per cent to N504.00, and NEM Insurance crashed by 4.74 per cent to N24.10.
Yesterday, a total of 1.8 billion shares valued at N30.1 billion exchanged hands in 19,372 deals versus the 677.4 billion shares worth N20.8 billion traded in 27,589 deals in the previous session, implying a slump in the number of deals by 29.78 per cent, and a surge in the trading volume and value by 165.72 per cent and 44.71 per cent apiece.
Abbey Mortgage Bank was the most active equity for the day after it sold 1.1 billion units worth N7.1 billion, Sterling Holdings traded 127.1 million units valued at N895.9 million, Custodian Investment exchanged 115.0 million units for N4.5 billion, First Holdco transacted 40.9 million units valued at N2.2 billion, and Access Holdings traded 38.2 million units worth N783.3 million.
By Adedapo Adesanya
Nigerian food and beverage company, Rite Foods Limited, has extended warm Yuletide greetings to Nigerians as families and communities worldwide come together to celebrate the Christmas season and usher in a new year filled with hope and renewed possibilities.
In a statement, Rite Foods encouraged consumers to savour these special occasions with its wide range of quality brands, including the 13 variants of Bigi Carbonated Soft Drinks, premium Bigi Table Water, Sosa Fruit Drink in its refreshing flavours, the Fearless Energy Drink, and its tasty sausage rolls — all produced in a world-class facility with modern technology and global best practices.
Speaking on the season, the Managing Director of Rite Foods Limited, Mr Seleem Adegunwa, said the company remains deeply committed to enriching the lives of consumers beyond refreshment. According to him, the Yuletide period underscores the values of generosity, unity, and gratitude, which resonate strongly with the company’s philosophy.
“Christmas is a season that reminds us of the importance of giving, togetherness, and gratitude. At Rite Foods, we are thankful for the continued trust of Nigerians in our brands. This season strengthens our resolve to consistently deliver quality products that bring joy to everyday moments while contributing positively to society,” Mr Adegunwa stated.
He noted that the company’s steady progress in brand acceptance, operational excellence, and responsible business practices reflects a culture of continuous improvement, innovation, and responsiveness to consumer needs. These efforts, he said, have further strengthened Rite Foods’ position as a proudly Nigerian brand with growing relevance and impact across the country.
Mr Adegunwa reaffirmed that Rite Foods will continue to invest in research and development, efficient production processes, and initiatives that support communities, while maintaining quality standards across its product portfolio.
“As the year comes to a close, Rite Foods Limited wishes Nigerians a joyful Christmas celebration and a prosperous New Year filled with peace, progress, and shared success.”
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