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80 Billion dollars withdrawn from Nigerian economy within one year

There are indications that Nigerian continues to lose investors confidence as more than eighty billion dollars have been withdrawn from different sectors of the economy in the last one year, signifying that the economic situation may become more precarious. Everyday, the demand for dollars keep increasing as more and more investors, determined to keep their money safe, continue to buy dollars even at higher rates, leading further to the crash of naira and further inflation that has increased to 17.6 per cent.

On Friday, Naira depreciated in most major segments of the foreign exchange market. The Nigerian currency fell by N2.24 to exchange at N308.69 to the dollar at the interbank market, from N306.93 recorded on Thursday. At the Bureau De Change (BDC) segment of the market, it closed at N420 to the dollar, N550 to the Pound Sterling and N465 against the Euro.

At the parallel market, naira lost N2 to close at N425 against the dollar from N423 it traded on Thursday, while it exchanged at N545 and N470 against the Pound Sterling and the Euro, respectively. Traders at the market said that despite the reduction in the rush for the greenback to meet up school fees payment, the naira continued to depreciate.
They said that the demand for dollars for importation far outstripped its supply.

A  senior banking official in one of Nigeria’s first generation banks told Gavel International on condition of anonymity that even Nigerians living abroad may be have lost confidence in the economy as the money repatriated  home have reduced drastically. “Between 2014 and 2015, Nigerians living abroad repatriated 14 billion dollars back to the country for various reasons, from developing properties, investment in businesses, to taking care of their families. However, from 2015 till date, only two billion dollars have been repatriated. This only suggests that every one is trying to keep their money for the fear of the unknown”.

This further corroborate the position of Vice President Yemi Osinbajo who in August 2015 said that foreign portfolio investment (FPI) coming into the Nigerian economy via the capital market has declined by 85.5 percent since the first quarter of 2015. Osinbajo, who spoke at the presidential policy dialogue organised by the Lagos Chambers of Commerce and Industry (LCCI), said foreign direct investment also took a plunge of 56 percent of from $395 million in Q1 2015 to $175million by Q1 of 2016.

He said FPI, which averaged $621 million in Q1 of 2015, had declined to $90.3 million by Q1 2016. “Inflation is at 16.5%. Depreciation of the naira, increase in importation costs due to scarcity of FX. GDP declined from 6.3% in 2014 to 2.15% in 2015 and -0.36% in Q1 2016,” he said.

Osinbajo however stated government’s commitment to revamp the economy. He said: “Priority attention was given to assist the states and local governments pay the salaries of workers, which were several months in arrears. We have had three such interventions, including the latest loan of N90bn as part of a fiscal responsibility plan for states.

“These interventions have helped to boost household spending, which were key steps to prevent the economy from falling into deep recession. We have pledged to keep capital spending in the budget at a minimum of 30%. Accordingly, we have already made capital releases of N332billion, with another N100 billion set to be released in the next few days. Other policy instruments used in this regard include the TSA, which has brought transparency into inflows & outflows of government monies;

A great effort has been made to improve non-oil revenues. This includes bringing an additional 700,000 companies into the tax net as compared to the targeted 500,000 set at the beginning of the year. FIRS has achieved 73.17% of its target for the first half of the year. Similarly, milled rice capacity is being increased from 3 million tons annually to 10 million tons of paddy annually;

“The present administration is a strong believer in public-private dialogue. Our immediate tasks to achieve our economic objectives are: Reduce fiscal and forex imbalances; Boost dollar liquidity; Curb inflation; Lower interest rate and ensure lending to the real sector; Increase FDIs and FPI by sustaining enabling policies.”

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