22 November 2015, Abuja – Nigeria is losing N256bn ($1.3bn) in foreign exchange inflows every month as a result of the global fall in the prices of crude oil, the country’s major revenue earner.
The Governor, Central Bank of Nigeria, Mr. Godwin Emefiele, who disclosed this on Friday night, said the development had also made the federal allocation to state governments drop by N2bn monthly.
He spoke at the annual Bankers’ Dinner organised by the Chartered Institute of Bankers of Nigeria.
He said, “Given the sharp fall in oil prices, federation allocation to states have dropped by an average of about N2bn for each month.
“Similarly, average inflows of foreign exchange into the CBN have fallen to by about $1.3bn per month; this has led to a sharp decline in our forex reserves from as high as $37bn as at June 2014, to $30bn.
According to Emefiele, Nigeria is currently passing through trying times and there is need for discipline in her consumption of foreign-made goods.
He added that the country cannot afford to continue to import everything amid falling foreign exchange reserves.
Despite the huge drop in the nation’s forex earnings as a result of the fall in crude oil prices, the CBN boss said Nigeria’s import rose to N917bn in September and might likely hit N1.2tn in December.
As a result, he said the CBN was set to begin a campaign aimed at encouraging Nigerians to consume locally made goods.
Emefiele said, “Nigeria cannot continue on this path of importing everything and anything. Indeed, it is both unacceptable and unsustainable and that was the reason we decided at the central bank to prohibit items we can produce here from accessing forex from the central bank.
“The last time we had oil prices at $50 per barrel for an extended period of time was in 2005 and our total import bill for that year was only N148bn. Yet, in the first nine months of this year, our total import bill has already risen to N917bn, and by logical extension, it is heading towards N1.2tn by the end of the year.
“The CBN will in due course embark on a national campaign called PAVE which stands for: Produce Locally, Add Value and Export. We definitely cannot survive as a people by importing everything and anything.’’
According to the governor, the crash in the prices of crude oil has resulted in speculative attack on the naira and round-tripping in the foreign exchange market.
This, he said, forced the CBN to devalue the naira by about 22 per cent, causing the gradual increase in inflation.
Emefiele said all the developments had led to the slow growth the economy was experiencing.
Emefiele explained, “I am not unaware of the short-term pains associated with our policy decisions, but I urge you all to understand that this time is different.
“This is an opportunity for us to look inwards, diversify our economy away from oil, produce locally and create jobs for our unemployed youths. Countries that successfully managed during the period of drop in crude prices are those who embraced the concept of producing and consuming locally made goods.”