Simple Ways to Increase Nigeria’s Foreign Reserve

#ChannelsTv | Nigeria’s Foreign Reserve Depleted by $1.37 Billion | Nigeria News

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## Nigeria’s External Reserve Takes a Hit: What Does This Mean for Nigerians?

It has been reported that Nigeria’s external reserve has depreciated by $1.37 billion in the first six months of 2022, reaching a total of $39.16 billion as of June 30th. This decline in foreign reserve has raised concerns about the implications for Nigerians and businesses operating in the country. In this video, we bring you insights on the impact of diminishing foreign reserves and what it means for the Nigerian economy.

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## Importance of Foreign Reserve and its Impact on Nigeria

The foreign reserve of a country plays a crucial role in various aspects of its economy. Firstly, it determines the ability to finance imports, and considering Nigeria’s high import dependency, a lower foreign reserve means reduced capacity to sustain imports. Secondly, it influences the exchange rate, which is vital for determining the value of goods in the country. As Nigeria heavily relies on imports, the strength of its currency is closely tied to the foreign reserve. In this video, our guest, Mr. Ezekiel Gomez, Team Lead at Jos Business School, sheds light on the importance of foreign reserves for Nigerians and businesses in the country.

## Challenges and Factors Leading to Depletion of Nigeria’s Foreign Reserve

The primary source of Nigeria’s foreign reserve is crude oil exports. However, despite the surge in global oil prices, Nigeria has struggled to meet its export quotas, resulting in a significant depletion of foreign reserves. Complementing this issue is the alarming rate of crude oil theft, with an estimated loss of 15 million liters per day, amounting to over 300,000 barrels. Moreover, insecurity and pipeline vandalization further hinder Nigeria’s ability to generate enough revenue from crude oil exports. This video explores the reasons behind the falling foreign reserves and the urgent need to address issues such as oil theft and explore non-oil sectors to strengthen Nigeria’s economy.

## Exploring Non-Oil Sectors for Economic Growth

While Nigeria heavily relies on revenue generated from oil exports, there exists untapped potential in non-oil sectors that could contribute to the country’s foreign reserve. Sectors such as mining, particularly the solar mirror sector, and agriculture have the capacity to generate substantial income. However, these sectors are often overshadowed by the focus on oil. By diversifying the economy and encouraging exports in non-oil sectors, Nigeria can reduce its import dependency and bolster its foreign reserves. Additionally, curbing the importation of non-essential goods and promoting local production can further conserve foreign exchange. In this video, we delve into the possibilities of diversification and its implications for Nigeria’s economy.

## Transformation of NNPC and its Impact on External Reserve

The recent transformation of the Nigerian National Petroleum Corporation (NNPC) into a limited liability company has raised concerns regarding its impact on the external reserve. As a limited liability company, NNPC can only pay dividends from profit, making its contribution to the national coffers contingent upon its financial performance. The conversion has also simplified tax liabilities, potentially reducing the funds allocated to the national coffers. This video sheds light on the implications of NNPC’s transformation and its potential consequences for Nigeria’s foreign reserve.

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Transcript:
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