The collapse of fiscal policies in the country and the total absence of governance is the bane of Nigeria’s current foreign exchange problem participant at the Vanguard’s Town Hall meeting have said. The lack of fiscal policy has resulted in Nigerians insatiable demand for foreign goods thus using up the nation’s foreign exchange earning for unproductive ventures. The situation is worrisome as in the first month of 2009, only $807.11 million came into the country while $3.879 billion went out. It was the same story for February when only $691.06 million came into the country as foreign exchange inflow while $3.221 billion went out.
The precarious foreign exchange situation in the country is contained in a presentation made by the CBN Governor, Professor Chukwuma Soludo at the Vanguard Town Hall Meeting on Operation Save the Naira. According to available figures which showed trend of foreign exchange inflow and out flow from January 2007 to February 2009, in January last year the total foreign Exchange inflow stood at $1.469 billion while the sum of $1.242 billion was exchanged for naira through sales of foreign exchange to end users by the CBN.
According to the data in the month of February 2008, while the sum of $1.508 billion came into the CBN coffers as foreign earnings by Nigeria $1.017 billion was sold to end users. In March while $4.364 billion was received by the CBN as foreign exchange inflow, $1.111 billion was sold out to end users.
The high trend of capital flight from the country became very noticeable in April as the nation got $4.556 billion and sold out $2.663 billion as a result of demand for foreign. Apparently without any fiscal policy put in place to address the situation, in May while foreign exchange receipts declined to $1.740 billion, demand rose sharply and $4.563 of the nation’s foreign exchange was converted into naira through sales to end users. In June 2008 at the peak of the oil prices in the international market place, the sum of $7.083 was received as foreign exchange inflow while $3.226 billion went out as out flows.
CBN Governor’s figure further show that in July 2008 $1.900 billion came into the nation’s coffer as foreign exchange receipts while $3.990 billion was monetised through sales to end users.
In August and September the foreign exchange inflow and outflow stood at 2.051 billion, 3.682 billion; 2.155 billion, and $3..031 billion respectively. In September the foreign exchange outflow stood at $6.627 billion while inflow or receipts stood at a mere $1.937 billion. In November 2008, foreign exchange earnings declined to $1.612 billion just as the amount that went out of the country stood at $4.511 billion. In December 2008 while the amount of foreign exchange that came into the country dropped to $1.587 billion the amount that went out stood at $6.112 billion.
For instance Nigeria earned a total of $53.004 billion between January 2007 and February 2008. During the same period the country collected and sold foreign exchange in dollars to end users to the tune of $62.916 billion showing that the country spent $9.912 billion more than it earned during the period.
Figures obtained from the CBN Governor’s presentation at the Save the naira Town Hall Meeting, show that a total of $1.394 million dollars came into the country’s coffer in January 2007 while the sum of $982.18 million was sold by the CBN to various Nigerian interest as end users of foreign exchange and the proceeds was posted to the federation account. In the month of January the sum of $411.9 million was saved.
In February, 2007 while $1.289 billion was received by the CBN as inflow into the federation account, the sum of $1.5 billion was however sold or converted into naira and shared among the three tiers of government. This implies that $210.77 million was taken from the previous month’s savings of $411.9 million.
According to the CBN figures in the month of March 2007, the sum of $1.250 billion came into the nation’s coffer as foreign exchange inflow while the sum of $1.517 billion was sold or monetised by the CBN on behalf of the federal government and the other tiers of government in the federation. In the same vein the sum of $1.212 billion came into the country in April while $922.74 million was converted into naira through sales to end users thus leaving the nation with a savings of $289.9 million. In the month of May 2007, a total of $1.22 billion was received by the CBN as foreign exchange inflow but as a result of Nigerians ever quest for foreign product, a total of $1.739 billion was converted into naira which is about $518.55 million more than what came into the country as foreign exchange inflow.
According to the CBN Governor’s figure in the month of June 2007 while a total of $1.561 billion came into the country as foreign exchange inflow, a total of $1.901 billion went out of the country by way of foreign exchange outflow from Nigerian residents and businesses who needed one thing or the other from outside the country.
In July 2007 while the sum of $1.631 billion was received by the CBN on behalf of the government, it converted or sold the sum of $1.591 billion. It was the same story in August when the apex bank got the sum of $1.768.82 billion as foreign exchange inflow and $615.21 went out as outflow.
In September, October, November and December the country’s foreign exchange inflow and outflow were; $1.300 billion, $430.17 million; $1.615, $448. 59 million; $1.885 billion, $1.364 billion; $3.408 billion, $1.021 billion respectively.
451.02 million barrel of crude oil was exported from Nigeria out of a total production of 588.82million barrel produced during the ten months from January to October 2008. The value of total production amounted to N7.60trillion. While the value of crude oil export for the ten months stood at N5.706trillon, domestic consumption amounted to N 1.899 trillion. The federal government had in the 2008 budget projected receipts of N4.529trillion into the Federation Account . It had estimated that Oil-related revenue was expected to amount to N3.606trillion or 80 per cent of this sum while non-oil sources of revenue were to account for the balance of N923billion or 20 per cent.
President Umaru Musa Yar’ Adua said in his 2009 budget speech “In addition to volatility in international oil prices, actual crude oil production has been lower than projected, averaging just over 2million barrels/day, due to the situation in the Niger Delta. As a result, overall revenue receipts have been well below expectation.Expert fears that if in the years of high oil revenue the government failed to implement fully its budget how will it fare in lean period for According to Yar’ Adua “The performance of the 2008 Budget has been mixed and indeed far from satisfactory. While releases of budgetary allocations to the MDAs have been on course, with 100 per cent of the capital vote released by the middle of November, actual utilisation has not kept pace with the releases due to a number of factors which we are closely looking into.
“On the revenue side, although international oil prices reached record high levels in the first half of 2008, overall revenue performance has been below expectation, due to domestic oil production disruptions and declining international energy prices, as the global economy responds to the transnational financial crisis.
But a break down of the figure of oil export from Nigeria showed that in January while a total of 65.1million barrel was produced at the rate of 2.10 million barrel per day, a total of 51.15million barrel was exported at the rate of 1.65 million barrel per day. At the average price of $94.26 at which crude was sold, a total of $6.136billion worth of crude was produced. The nation in January however exported 51.15million barrel at $94.26 thus realising a total of $4.821billion.
According to the figure of oil production and export from Nigeria in the month of February, while 57.4million barrels of crude oil was produced amounting to $5.633billion at the ruling price of $98.15 the export of 44.8million barrel of crude oil in the month generated $3.533billion into the federation account. In March when prices of crude oil rose above the $100 mark the average price Nigeria crude sold for according to the Department of Petroleum Resources was $103.73. At this price level Nigeria produced 2 million barrel per day and a total of 62 million barrel was produced amounting to $6.431billion. However in March the export volume dropped from 1.6million barrel a day to 1.55million barrel indicating that 48.05million barrels of crude oil amounting to $4.984billion was exported and the amount credited to the federation account.
According to the DPR, NNPC and CBN data in the month of April crude oil production went down to 1.81 million barrel per day and at the end of the month of April to volume of production was 54.3million barrels. But the prices of crude rose to $116.73 thus giving the total value of crude produced in April as $6.338billion. Export figure for the month however lagged behind as it dropped further from 1.55million barrel a day to 1.36 million barrel a day thus generating crude oil revenue of $4.762billion into the federation account.
Crude oil Production figure for the month of May also show that average production per day was 1.86 as a result total production for the month was 57.66million barrel. In May however prices of crude rose further and Nigeria crude was sold in the international market for $126 thus generating a total of $5.532billion into the federation account from where allocation was made to the federal, state and local governments.
In June while the daily out put of crude was 1.8 million barrel per day the total volume produced was 54 million barrels which total value at $138.74 per barrel amounted to $7.491billion. Export however dropped to 1.35 million barrel per day and a total of 40.5million barrel was exported amounting to $5.6189billion according to government figures. In the same vein crude oil production per day for the month of the July had a record figure of 1.9 million barrel per day. As a result a total of 58.9 million barrels were produced out of which 44.95 million barrels were exported at the prevailing price of $141.86 per barrel. This led to the accretion to the federation account the sum of $6.3766billion in July when the international price of crude was at its peak.
In August when the price of crude declined to $115.84 per barrel total export volume stood at 46.81million barrels resulting in the nation earning $5.4224billion. In September total export volume of crude stood at 45 million barrels while price was 103.83 the earnings from oil dropped to $4.703billion and $3.531billion in October.