• FX defies logic as petrol imports fall to $2.79b, inflows rise to $24.55b in Q2
• Nigeria needs $10b yearly investment to achieve SDGs, says UN deputy chief
• Dabiri-Erewa highlights diaspora’s role in economic transformation
• As Nigeria targets seven per cent growth with diaspora investment drive
The naira has continued its volatile trend, hovering between N1,600 and N1,700 to the dollar, even as Nigeria recorded a current account surplus of $5.14 billion, or 11.46 per cent of GDP, in the second quarter of 2024.
The Guardian learned that the surplus marked a substantial improvement over the $3.38 billion, or 7.35 per cent of GDP, recorded in the first quarter.
In its latest report, the Central Bank of Nigeria (CBN) revealed that the country’s imports dropped by 20.59 per cent, from $10.88 billion in Q1 to $8.64 billion in Q2. The CBN attributed this reduction mainly to lower petroleum product imports, which decreased from $4.31 billion to $2.79 billion as the Dangote refinery entered the market.
Additionally, the naira depreciation may have contributed to a drop in non-oil imports, as import costs increasingly fall out of reach for many consumers.
The CBN report further indicated that diaspora remittances climbed to $5.78 billion in Q2, up from $5.14 billion in Q1, highlighting a robust inflow from overseas. However, despite these positive indicators, the naira’s depreciation has puzzled economic experts.
Some analysts suggest the CBN might deliberately be undervaluing the currency to increase revenue collection, which experts argue imposes an unnecessary burden on the populace if intentional devaluation is at play.
The naira’s ongoing instability has spurred speculation and a crisis of confidence, with politicians and other high-net-worth individuals increasingly opting for dollars and converting their funds to more stable foreign currencies.
But with the Dangote refinery promising to cut Nigeria’s demand for dollars for petrol imports, there is hope that economic indicators for the latter half of the year may be more favourable.
According to the CBN, foreign exchange inflows into Nigeria’s economy rose to $24.55 billion in Q2 2024, an increase from $22.26 billion in Q1. This growth was bolstered by autonomous inflows, which reached $16.12 billion, and CBN inflows, which increased to $8.43 billion.
At the same time, foreign exchange outflows declined significantly, dropping by 31.51 per cent to $7.37 billion compared to the previous quarter. This reduction was due to decreased outflows through autonomous channels and the CBN.
These combined trends boosted Nigeria’s net foreign exchange inflows by 49.39 per cent, reaching $17.18 billion in Q2, up from $11.50 billion in Q1. The CBN reported a net inflow of $2.72 billion, reversing a net outflow of $0.85 billion in the prior quarter.
Meanwhile, the Nigerian Foreign Exchange Market (NFEM) recorded heightened activity, with average turnover rising by 3.83 per cent to $204.43 million from Q1’s $196.88 million. Despite this increase in activity, the exchange rate depreciated by 5.86 per cent to N1,385.96 per dollar, largely due to demand pressures.
Looking ahead, the CBN expressed optimism regarding Nigeria’s economic growth, citing anticipated increases in crude oil production and favourable oil prices as drivers of the positive outlook.
The bank also expects tax and fiscal reforms to stimulate further growth. However, the CBN warned of potential risks to this outlook, including global economic uncertainties, domestic insecurity, rising energy and transport costs, and continued monetary tightening.
Monetary policy interventions are expected to ease inflationary pressures in the short term, although climate-related issues, security concerns, and political instability may present ongoing challenges.
The CBN remains optimistic about Nigeria’s external position, expecting support from increased domestic oil production, strong crude prices, capital inflows, and remittances. Nonetheless, the CBN cautioned that delays in rate cuts in advanced economies and geopolitical tensions could impact capital inflows, potentially leading to capital reversals in Nigeria.
Meanwhile, according to the United Nations (UN), Nigeria requires a yearly investment of $10 billion to meet its Sustainable Development Goals (SDGs) by 2030.
Amina Mohammed, the UN’s deputy secretary-general, revealed this during MTN Nigeria Foundation’s 20th anniversary event, which was themed “Unlocking Private Capital for Sustainable Development in Nigeria.”
Mohammed stressed that achieving these global goals demands a collaborative effort from all sectors, even as public resources alone are insufficient. “Bridging this gap requires bold partnerships and private sector contributions from organisations like the MTN Foundation, as well as international partners,” she noted.
She also highlighted the need for transparency, urging measures to counter corruption, address illicit financial flows, and create an investment-friendly environment that benefits all.
Mohammed assured that the UN is ready to back initiatives by MTN Foundation and other private sector stakeholders to amplify their collective impact. “We can accelerate action on the SDGs, foster innovation, and tackle systemic development barriers. Through partnerships, we can advance green and digital transitions, ensuring progress reaches all communities,” she added.
MTN Nigeria’s Chairman, Dr Ernest Ndukwe, praised the foundation’s commitment over the past 20 years, noting its contributions towards uplifting communities, particularly through education, healthcare, and economic empowerment projects.
Ndukwe disclosed that MTN will continue its commitment to social impact by allocating one per cent of its post-tax profits to the foundation’s projects.
Acting Chairman of MTN Nigeria Foundation, Dennis Okoro, highlighted the foundation’s contributions to social development across Nigeria. He noted that the MTN Foundation has invested over N30 billion in over 50 projects since its inception, impacting about 31.3 million Nigerians across 3,323 communities.
Echoing this sentiment, Executive Director Odunayo Sanya emphasised the foundation’s commitment to future community engagement. “We have repositioned for the next 20 years, with a refreshed vision and a commitment to scaling up impact across Nigeria,” she said.
Sanya added that the foundation’s mission includes forging collaborations to broaden the scope of its impact nationwide.
This came as Abike Dabiri-Erewa, Chairman/CEO of the Nigerians in Diaspora Commission (NiDCOM), explained that under President Bola Tinubu, Nigeria is pushing to achieve seven per cent economic growth and become a trillion-dollar economy by fostering industrialisation, innovation, and a robust small and medium enterprise (SME) sector.
Dabiri-Erewa shared these goals yesterday at the Nigeria Diaspora Investment Summit (NDIS) in Abuja, which was themed “Adapting Stability through Diaspora Investment: Navigating the Path to Prosperity.”
“The summit offers an opportunity for investors and partners to engage with Nigerians within and outside the country,” she said. “Investing in Nigeria through NDIS provides a unique opportunity to be part of our nation’s economic growth and diversification.” She added that Nigerians in the diaspora, viewed as valuable social capital, remitted $90 billion in recent years, with $20 billion projected for 2023.
The NDIS also showcased the rise of Nigeria’s creative industry, which has witnessed unprecedented growth, particularly in film.
While moderating a panel on investment opportunities in the creative industry, veteran actor Dr Patric Doyle noted that Nigerian films now dominate box office revenues, accounting for 50.4 per cent of total earnings and surpassing international films.
“This achievement reflects the exceptional work of Nigerian actors and filmmakers, with the film ‘Black Book’, led by RMD (Richard Mofe Damijo), setting records as the most successful African title on Netflix,” he said.
Doyle stressed that the Nigerian creative sector’s success offers fertile ground for diaspora investment, with the potential to fuel both artistic innovation and economic growth.
Panellist Idris Olorunnimbe, founder of The Temple Company, reiterated the global demand for Nigerian creative content, urging the diaspora to invest in the infrastructure and talent driving the industry. “The market is rich with data and profitability; diaspora investors can secure substantial returns while helping the industry grow,” he explained.
Ayo Animashaun, founder of Hip TV, spoke on Afrobeats’ global success, calling for diaspora support to further capitalise on this momentum. “Afrobeats generated over $345 million from streaming on just two platforms last year. We need our own streaming service to harness this popularity,” he said. “With Nigerian artists selling out concerts worldwide, there is enormous potential for new record labels and festivals to promote Afrobeats.”
Niyi Akinmolayan, a Nigerian-Canadian filmmaker, called on stakeholders to collaborate to make Nigerian films accessible globally. “We have the resources and talent in Nigeria to shoot major productions locally,” he said, urging international productions to consider Nigeria a filming location.
Richard Mofe Damijo (RMD) expressed confidence that fostering trust between Nigerian businesses and their diaspora counterparts would drive growth across agriculture, real estate, and manufacturing. He also encouraged the government to consider grants and other support for the creative industry to spur further development.
Hollywood director Foster Corder highlighted the importance of marketing and encouraged Nigerian creatives to take pride in their work to elevate Nollywood’s presence internationally.
