The surge is an increase of ₦8.02 trillion compared to the ₦134.3 trillion recorded three months earlier. This resulted from exchange rate fluctuations, growing domestic borrowing, and Nigeria’s fiscal policy directions.

The country’s debt stock consists of external and domestic borrowings undertaken by the Federal Government, state governments, and the Federal Capital Territory (FCT). 

External and Domestic Debt Split

External debt accounts for ₦68.89 trillion ($43.03 billion), 48.4% of the total debt stock. This showed the rate at which Nigeria relies on foreign loans to fund development projects and address budget deficits. 

Meanwhile, domestic debt stands at ₦73.43 trillion ($45.87 billion), contributing 51.6% of the overall figure. The Federal Government alone is responsible for ₦69.22 trillion ($43.23 billion) of the domestic debt, while state governments and the FCT owe ₦4.21 trillion ($2.63 billion).

Debt Growth and Exchange Rate Impact

From June to September 2024, Nigeria’s debt increased by ₦8.02 trillion (5.97%), driven by high domestic borrowing and the depreciation of the naira against the US dollar. 

The exchange rate weakened from ₦1,470.19/$ in June to ₦1,601.03/$ in September, amplifying the naira value of external obligations. While external debt in dollar terms grew marginally by 0.29%, its naira equivalent surged by 9.22%.

Composition of Domestic Debt

Federal Government bonds were the largest domestic debt component, growing by 4.47% to ₦54.65 trillion. Other components include Nigerian Treasury Bills, which declined slightly to ₦11.73 trillion, and promissory notes, which increased to ₦1.77 trillion. 

Retail-focused instruments like Federal Government Savings Bonds also recorded growth, reflecting increased participation from smaller investors.

External Debt Profile

External debt, valued at $43.03 billion, is primarily composed of multilateral loans, which account for 50.6% of the total and increased slightly to $21.77 billion. Obligations to bilateral lenders, including China and France, declined marginally, while commercial loans, such as Eurobonds, remained steady at $15.12 billion. 

The issuance of a $2.2 billion Eurobond in December 2024 further expanded Nigeria’s external debt, aimed at funding the national budget.

The DMO’s report revealed Nigeria’s increased reliance on borrowing to finance budget deficits and support development projects. While domestic borrowing has grown, external loans remain essential to fund infrastructure and social initiatives.

However, the rapid depreciation of the naira, coupled with mounting debt obligations, is limiting debt sustainability. Rising debt servicing costs, declining oil revenues, and high inflation rates further compound the fiscal challenges.

Initiatives to moderate short-term domestic borrowing are evident, with reductions in Treasury bills and Sukuk. Nonetheless, Nigeria’s issuance of its first domestic dollar-denominated bond added ₦1.47 trillion to the debt stock, pointing to the need for innovative funding mechanisms.

Checks indicate that the exchange rate has been weakening lately in line with the steady crash on the official market.

Accordingly, platforms such as; Trove, Remitly, Bamboo, and PiggyVest are selling the dollar above N1,630 as of Thursday, July 18, 2024.

Aminu Gwadabe, ABCON national president, stated this in a letter to the CBN Director, Trade & Exchange Department.

The appeal comes when the parallel market rate of 1,235/$ is lower than the BDCs’ applicable buying exchange rate of 1,251/$ (plus a 1.5 per cent margin) set by the CBN in its latest tranche of interventions.

Gwadabe lamented that the naira’s speedy recovery made CBN’s selling rate to BDCs very expensive and difficult to offload to retail end buyers, who were going to the undocumented forex operators for cheaper rates.

He further expressed concerns that many BDCs, who funded their accounts for dollar allocations, were yet to receive their allocation of dollars to meet the legitimate critical demand of their clients due to scrutinisation of the BDCs’ documents for collections at the various designated centres.

He noted that this had made the BDCs vulnerable to exchange rate risk and significant losses.

“We discovered a worrisome development where many of our members who paid for dollar allocations at N1,251/$ with a margin of 1.5 per cent are yet to receive their disbursement. This is happening in the face of the prevailing open market rate of N1,235/$, which is lower than the authorised applicable exchange rate by the CBN to the BDCs,” the letter said.

Despite this development, ABCON lauded the CBN leadership for the recall of BDCs into the official FX window and steps taken by the apex bank to strengthen the naira against the dollar and other global currencies.

ABCON president stated that the positive fallout of the CBN’s efforts to restore the naira’s glory came faster than expected, reiterating its commitment to working with the apex bank to realise the objectives of the government towards exchange rate stability and economic growth.

He added that ABCON’s forecasts in the ongoing market development indicated a willingness of the market to correct itself with realistic price discovery as the naira is forecast to continue to appreciate further across the market with the increasing sources of foreign exchange inflows aided by the CBN policies

“It is in view of the above market developments that we write to appeal to your good selves for readjustments and review downwards of our funding rate of the last tranche (2nd bidding) from N1,251/$  further down to reflect current market rate discovery.

“This became imperative as it is only the consideration of the readjustment downward that will enable our members to upload their holding positions,” he noted.

The association also requested that the process of payments at the various disbursement centres be reviewed in the immediate time to a medium time automation to achieve enhanced timely payments while also observing the spot nature of transactions.

According to the group, the apex bank should introduce a cut-off time for payments and collection of bids, adding that the current open-ended system for payments and collection of bids does not make for effective administration and control of the process.

“Consequently, many of our members are jittery to bid/collect their bid for fear of losing money as the current market reality has the potential to force us to sell below cost price and antithetical to recent market price discovery,” it elucidated.

ABCON insisted that the disturbing exchange rate disparity could be addressed by a quick and decisive response of the apex bank, which would go a long way in bolstering BDC operators’ confidence in the ongoing intervention by the Central Bank of Nigeria as well as enhance their participation in the bidding process.

Leveraging these technologies offers governments the tools and capabilities to enhance economic resilience, make informed policy decisions, and protect critical infrastructure.

Additionally, citizen responsibility plays a crucial role in curbing high inflation, as individuals can contribute to economic stability through informed consumption, financial prudence, and adherence to regulations.

By harnessing AI and cybersecurity, countries can empower their citizens to act responsibly and collaboratively in navigating uncertain economic conditions, mitigating risks, and driving sustainable growth in the face of inflationary pressures.

With inflation hitting 31.7%, the highest in 28 years, the Nigerian economy is facing significant challenges. In navigating these turbulent times, it is essential to harness the power of technology such as AI and cybersecurity to monitor and manage economic processes effectively.

Additionally, the participation of citizens in curbing high inflation by being mindful of their spending, advocating for policies that promote price stability, and actively engaging in responsible economic practices can contribute to achieving a more stable and sustainable economic environment for all.

Let’s dive into some of the fundamental indices for navigating such an economic downturn. In facing the challenges presented by a high inflation rate of 31.7%, the highest in 28 years, it is crucial to leverage technological advancements such as AI and cybersecurity to effectively monitor and manage economic processes.

Moreover, the integration of citizens’ responsibilities in curbing high inflation through mindful spending, advocacy for policies promoting price stability, and engaging in responsible economic practices is paramount in creating a more stable and sustainable economic environment. By addressing these fundamentals, we can work towards mitigating the impact of high inflation and fostering economic resilience.

Here we are:

1. Understanding the causes of inflation:

It is important to understand the factors contributing to the high inflation rate in Nigeria, such as increased food prices, currency depreciation, and supply chain disruptions.

2. Budgeting and financial planning:

In times of high inflation, it is crucial to create a budget and stick to it. Cut unnecessary expenses and prioritize essential items to cope with rising prices.

3. Diversify income sources:

To mitigate the impact of inflation, consider diversifying your sources of income to ensure financial stability in the face of economic uncertainties.

4. Investing wisely:

Explore investment opportunities that can help protect your wealth against inflation, such as real estate, commodities, or stocks.

5. Seeking financial assistance:

If you are struggling to make ends meet, consider seeking financial assistance from charitable organizations, government programs, or community support networks.

6. Stay informed:

Stay updated on economic developments and government policies that may impact inflation rates and adjust your financial strategies accordingly.

7. Seek professional advice:

Consult with a financial advisor or economist to better understand the implications of high inflation and devise a suitable plan to navigate through these challenging times.

To effectively navigate an economic downturn marked by the highest inflation rate in 28 years at 31.7%, it is essential to analyze historical data and examples that illustrate successful strategies.

For instance, during the economic crisis of 2008, countries like Brazil implemented measures to combat inflation, including adopting a floating exchange rate system to stabilize prices. This approach resulted in a gradual reduction in inflation rates over time.

Additionally, looking at historical data from Nigeria, we can observe how previous governments have utilized policies such as tightening monetary supply and increasing interest rates to curb inflationary pressures. These examples demonstrate the importance of leveraging past experiences and data to inform current strategies for managing high inflation.

By drawing insights from historical successes and failures, we can develop more nuanced and effective solutions to address the current economic challenges facing Nigerians.

Historically, Nigeria has experienced periods of high inflation, with the current rate of 31.7% being the highest in 28 years. Understanding the historical context of inflation in Nigeria can provide insights into how individuals and businesses can navigate through such challenging economic conditions.

In the 1970s, Nigeria experienced high inflation due to the oil boom, which led to excessive government spending and currency devaluation.

This trend continued into the 1980s, with inflation rates reaching double digits. The 1980s were marked by economic downturns, structural adjustment programs, and currency devaluations, all contributing to high inflation.

During the 1990s, Nigeria continued to grapple with high inflation rates, exacerbated by political instability, corruption, and mismanagement of the economy. The trend of high inflation persisted throughout the early 2000s, with rates fluctuating but remaining elevated.

In recent years, factors such as falling oil prices, foreign exchange shortages, and disruptions in agricultural production have contributed to the current inflation rate of 31.7%.

This has led to increased prices of food, transportation, and other essential goods, placing a significant burden on Nigerian households.

To navigate through these challenging times, individuals and businesses can look to historical examples of how Nigerians have coped with high inflation in the past.

Strategies such as budgeting, diversifying income sources, investing wisely, seeking financial assistance, staying informed, and seeking professional advice have proven effective in mitigating the impact of inflation on personal finances and business operations.

By understanding the historical trends and implications of high inflation in Nigeria, individuals and businesses can better prepare and adapt their financial strategies to weather the current economic challenges and uncertainties.

When seeking solutions to address the escalating inflation rate of 31.7%, the government should explore a variety of avenues to effectively mitigate the impact on the economy and its citizens.

One potential source of inspiration could be neighbouring countries that have successfully navigated similar economic challenges in the past.

Countries like Ghana and South Africa have implemented targeted policies to stabilize their economies during periods of high inflation, offering valuable insights for Nigeria to consider.

Additionally, consulting with international financial organizations such as the International Monetary Fund (IMF) or the World Bank could provide the government with expert guidance and best practices for managing inflation and restoring economic stability.

Furthermore, engaging with local economic experts, policymakers, and industry leaders can help generate innovative solutions tailored to Nigeria’s specific circumstances.

By drawing on a diverse range of sources and perspectives, the government can develop a comprehensive strategy to address the current inflation crisis and pave the way for sustainable economic growth and prosperity.

When seeking solutions to address the escalating inflation rate of 31.7%, the government should explore a variety of avenues to effectively mitigate the impact on the economy and its citizens.

One potential source of inspiration could be neighbouring countries that have successfully navigated similar economic challenges in the past.

Countries like Ghana and South Africa have implemented targeted policies to stabilize their economies during periods of high inflation, offering valuable insights for Nigeria to consider.

Additionally, consulting with international financial organizations such as the International Monetary Fund (IMF) or the World Bank could provide the government with expert guidance and best practices for managing inflation and restoring economic stability.

Furthermore, engaging with local economic experts, policymakers, and industry leaders can help generate innovative solutions tailored to Nigeria’s specific circumstances.

By drawing on a diverse range of sources and perspectives, the government can develop a comprehensive strategy to address the current inflation crisis and pave the way for sustainable economic growth and prosperity.

Furthering in addressing the current high inflation rate in Nigeria, the government should consider a multi-faceted approach that addresses both short-term and long-term factors contributing to inflation.

Some potential solutions that the government could explore include:

1. Monetary policy adjustments:

The Central Bank of Nigeria (CBN) plays a crucial role in controlling inflation through monetary policy tools such as interest rate adjustments, open market operations, and reserve requirements.

The government could work closely with the CBN to implement appropriate measures to manage the money supply and stabilize prices.

2. Fiscal policy measures:

The government can also use fiscal policy tools such as taxation, public spending, and budget management to control inflation. Fiscal discipline and efficient allocation of resources can help reduce inflationary pressures in the economy.

3. Structural reforms:

Addressing structural issues such as infrastructure deficits, regulatory bottlenecks, and corruption can help improve productivity, reduce costs, and enhance economic competitiveness. Implementing policies that promote transparency, efficiency, and accountability can help create a conducive environment for sustainable economic growth and price stability.

4. Investment in agriculture:

Given that food inflation is a major driver of overall inflation in Nigeria, the government could focus on boosting agricultural production, improving supply chains, and enhancing food security. Investing in agriculture and supporting smallholder farmers can help stabilize food prices and reduce inflationary pressures.

5. Exchange rate management:

The government should work to maintain a stable exchange rate to reduce imported inflation and enhance business confidence.

Implementing policies that promote foreign exchange inflows, export diversification, and exchange rate stability can help mitigate inflationary pressures stemming from currency fluctuations.

6. Collaboration with stakeholders:

The government should engage with key stakeholders such as businesses, labour unions, and civil society to understand their concerns, gather feedback, and implement targeted interventions.

Building consensus and collaboration can help foster a supportive environment for implementing effective inflation control measures.

By adopting a comprehensive and coordinated approach that addresses the root causes of inflation and involves a wide range of stakeholders, the government can effectively navigate the current economic challenges and work towards achieving price stability and sustainable economic growth in Nigeria.

In the face of the ongoing economic challenges, there is an opportunity for citizens to collaborate with the government and contribute to finding solutions to address the prevailing issues.

One way citizens could assist the government is by actively participating in community initiatives and programs aimed at supporting vulnerable populations adversely affected by the economic downturn.

Additionally, engaging in constructive dialogue with policymakers through town hall meetings or feedback channels can provide valuable insights and feedback on the impact of government policies on the ground.

By fostering a spirit of collaboration and collective responsibility, citizens can work alongside the government to navigate these challenging times and build a more resilient and inclusive economy for all.

Yes, citizens can play a significant role in helping the government address high inflation and economic challenges in Nigeria. Some ways in which citizens can support the government in tackling inflation include:

1. Practicing responsible consumption:

Citizens can contribute to reducing inflation by practising responsible consumption habits, such as avoiding unnecessary purchases, comparing prices before making buying decisions, and limiting consumption of imported goods that may contribute to inflationary pressures.

2. Supporting local producers:

By prioritizing locally-made products and supporting local farmers and businesses, citizens can help boost domestic production, create jobs, and reduce reliance on imported goods, which can contribute to price stability and lower inflation.

3. Advocating for good governance:

Citizens can hold government officials accountable for sound economic policies, transparency, and accountability in managing public resources. By advocating for good governance practices and actively participating in the democratic process, citizens can help promote policies that support economic stability and reduce inflation.

4. Promoting financial literacy:

Improving financial literacy among citizens can help individuals make informed decisions about savings, investments, and borrowing, which can contribute to overall economic stability and reduce inflationary pressures.

5. Engaging in dialogue and advocacy:

Citizens can engage in constructive dialogue with policymakers, participate in policy discussions, and advocate for policy reforms that address the root causes of inflation and economic challenges. By voicing their concerns and mobilizing collective action, citizens can help shape policies that promote economic stability and benefit the wider society.

Overall, citizens have a crucial role to play in supporting the government’s efforts to address inflation and economic challenges in Nigeria.

By practising responsible consumption, supporting local producers, advocating for good governance, promoting financial literacy, and engaging in dialogue and advocacy, citizens can contribute to creating a more resilient and inclusive economy that fosters sustainable growth and price stability.

Emerging technologies like artificial intelligence (AI) and cybersecurity have become crucial components in navigating the complex landscape of the digital age.

AI applications have shown potential in enhancing efficiency and decision-making processes in various sectors, from healthcare to finance.

However, they also raise concerns about data privacy and ethical implications. Cybersecurity, on the other hand, plays a critical role in safeguarding sensitive information and networks from malicious threats. As technology continues to advance, governments must prioritize investments in AI research and cybersecurity measures to harness the benefits of these technologies while mitigating potential risks and ensuring the protection of critical infrastructure and sensitive data.

Emerging technologies like artificial intelligence (AI) and cybersecurity have become crucial components in navigating the complex landscape of the digital age. AI applications have shown potential in enhancing efficiency and decision-making processes in various sectors, from healthcare to finance.

However, they also raise concerns about data privacy and ethical implications. Cybersecurity, on the other hand, plays a critical role in safeguarding sensitive information and networks from malicious threats.

As technology continues to advance, governments must prioritize investments in AI research and cybersecurity measures to harness the benefits of these technologies while mitigating potential risks and ensuring the protection of critical infrastructure and sensitive data.

Technology, particularly Artificial Intelligence (AI) and cybersecurity can also play a significant role in helping the government address high inflation and economic challenges in Nigeria. Here are some ways in which technology can support the government’s efforts:

1. AI for economic forecasting:

AI can be used to analyze large volumes of economic data and predict trends, which can help policymakers make more informed decisions to address inflation and economic challenges. AI-powered forecasting models can provide real-time insights and predictions to guide policy responses.

2. Automation and efficiency:

AI and automation technologies can help streamline government processes, reduce administrative costs, and improve efficiency in delivering public services. By automating routine tasks and processes, governments can free up resources to focus on strategic initiatives to tackle inflation effectively.

3. Cybersecurity for financial systems:

Cybersecurity is crucial for safeguarding financial systems and protecting against fraud, cyberattacks, and data breaches that could undermine economic stability. Strong cybersecurity measures can help protect financial institutions, payment systems, and critical infrastructure from malicious actors, ensuring the integrity and security of the financial system.

4. Digital payment systems:

Technology-driven digital payment systems can help facilitate secure and efficient transactions, reduce transaction costs, and promote financial inclusion.

By expanding access to digital payments and promoting cashless transactions, governments can reduce the reliance on physical cash, which can help combat inflation and improve economic efficiency.

5. Data analytics for policymaking:

Data analytics tools can help governments make evidence-based policy decisions by analyzing economic data, monitoring key indicators, and evaluating the impact of policy interventions.

By harnessing data analytics capabilities, governments can identify trends, assess risks, and design targeted policy measures to address inflation and economic challenges effectively.

Overall, technology, including AI and cybersecurity, can be valuable tools for the government to enhance economic policymaking, strengthen financial systems, and mitigate inflationary pressures. By leveraging technology effectively, governments can unlock new opportunities to promote economic stability, foster innovation, and drive inclusive growth in Nigeria.

Nations leveraging AI and cybersecurity to navigate high inflation can serve as role models for effective economic management in the digital age.

By harnessing the capabilities of AI, such as predictive analytics and automation, these countries can streamline processes, optimize resource allocation, and make data-driven decisions to counteract the negative effects of inflation.

Additionally, robust cybersecurity measures can safeguard financial systems and critical infrastructure from cyber threats, ensuring stability and resilience in the face of economic challenges.

As these nations demonstrate, incorporating advanced technologies like AI and cybersecurity into economic strategies can enhance efficiency, mitigate risks, and foster sustainable growth amid high inflation pressures.

Nations leveraging AI and cybersecurity to navigate high inflation can serve as role models for effective economic management in the digital age.

By harnessing the capabilities of AI, such as predictive analytics and automation, these countries can streamline processes, optimize resource allocation, and make data-driven decisions to counteract the negative effects of inflation.

Additionally, robust cybersecurity measures can safeguard financial systems and critical infrastructure from cyber threats, ensuring stability and resilience in the face of economic challenges.

As these nations demonstrate, incorporating advanced technologies like AI and cybersecurity into economic strategies can enhance efficiency, mitigate risks, and foster sustainable growth amid high inflation pressures.

Nonetheless, several nations have successfully leveraged AI and cybersecurity technologies to navigate high inflation and economic challenges.

Some examples includes:

1. United States:

The U.S. government has been investing in AI research and development to improve economic forecasting, optimize policy decisions, and enhance cybersecurity capabilities.

Agencies such as the Department of Defense and the Department of Homeland Security have deployed AI-powered tools to detect and respond to cybersecurity threats, safeguard critical infrastructure, and combat inflationary pressures.

2. Singapore:

Singapore has developed a national AI strategy to harness the potential of AI for economic growth, innovation, and social development.

The government has partnered with industry stakeholders to promote AI adoption in various sectors, including finance, healthcare, and transportation, to enhance productivity, efficiency, and resilience in the face of economic challenges such as inflation.

3. Israel:

Israel is known for its strong cybersecurity capabilities and has established itself as a global leader in cybersecurity innovation.

The Israeli government has invested in cybersecurity research, education, and industry partnerships to address emerging cyber threats, protect critical infrastructure, and enhance economic resilience in a high-inflation environment.

4. Estonia:

Estonia has embraced digital transformation and e-governance to streamline government services, promote economic growth, and enhance cybersecurity resilience.

The government has implemented digital identity solutions, secure digital payment systems, and advanced cybersecurity measures to protect against cyber threats and ensure economic stability amid inflationary pressures.

These examples demonstrate how countries around the world are leveraging AI and cybersecurity technologies to navigate high inflation and economic challenges effectively.

By investing in technology-driven solutions, governments can enhance their economic resilience, mitigate risks, and promote sustainable growth in the face of complex economic conditions.

Conclusively, the examples of nations leveraging AI and cybersecurity to navigate high inflation demonstrate the transformative power of technology in addressing economic challenges.

By investing in AI research, cybersecurity capabilities, and digital infrastructure, governments can enhance their economic resilience, protect against cyber threats, and promote sustainable growth in a volatile economic environment.

Moreover, citizen responsibility plays a vital role in curbing high inflation, as individuals’ actions and decisions can significantly impact the economic landscape.

As countries continue to embrace innovation and digital transformation, the strategic use of AI and cybersecurity, coupled with citizens’ active participation and responsibility, will play a crucial role in shaping their economic future, ensuring stability, and fostering a collaborative approach to combat inflationary pressures.

This decline coincides with the announcement from the cryptocurrency trading platform Binance that it will cease trading activities involving the Nigerian currency.

The drop on Tuesday marks the first in three days, indicating that demand pressures persist in the forex market as supply remains insufficient.

According to data from the Nigeria Autonomous Foreign Exchange Market (NAFEM), where forex is officially traded, the domestic currency depreciated by 4.26% at the end of trading, closing at N1,602.43 to a dollar at the close of business.

This represents a loss of N68.24 compared to the N1,534.19 closing on Monday. Meanwhile the intraday high was N1,652.40/$1, while the intraday low was N1,450/$1, representing a spread of N202.40/$1.

According to data obtained from the official NAFEM window, forex turnover at the close of trading was $291.78 million, representing a 63.26% increase compared to the previous day.

Forex turnover has averaged over $200 million in the past week as trading continues to pick up in the official market.

However, on the parallel market, the Naira depreciated against the dollar as it was quoted for N1,630/$1, reflecting 1.84% compared to the previous day’s quote of N1,600.

The Great British Pound (GBP) depreciated by 7.32% to close at £1/N2050 as against £1/N1,900 the previous day.  Additionally, the Naira weakened against the Euro by 0.57%, trading at N1750/EUR1 compared to N1740/EUR1 reported the previous day.

At above N1,600/$1, the exchange rate between the naira and dollar is down by 43% in 2024 and remains one of the worst currencies in Sub-Saharan Africa. This is despite several policy measures introduced by the apex bank to resolve the forex crisis.

Officials close to the central bank have often cited the activities of cryptocurrency traders as a major contributory factor to the exchange rate depreciation. Critics of this government stand will point to the depreciation of the naira as further evidence that the naira is inherently weak with or without the activities of cryptocurrency traders.

Atiku Bagudu, Minister of Budget and National Planning, disclosed this while fielding questions from State House journalists after meeting with President Bola Tinubu.

Bagidu explained that before arriving at the projected exchange rate of N750 to the dollar in the 2024 budget, which the National Assembly raised to N800 to the dollar, the government considered and viewed critically, the average performance of the naira.

“For budgeting purposes. You don’t use the spot rate of anything. Oil prices can go to 120 today; maybe there is a shortage; maybe there is a collision between two ships that will block a channel. It would be foolish to use that as a reference price. I should take a period of maybe six months to one year and say, Let me observe this average behaviour, so you don’t use spot prices. So even with an exchange rate like that,” the minister said.

He explained that “much as we are hoping that it will soon come below, but at the time you are doing the budget, you will take a view on average performance. And that’s what we took.”

“In fact we took an average performance of 750 on the executive side and we proposed it to the National Assembly and the National Assembly in its wisdom, and mind you this is democracy, and President Tinubu is one who is a lifelong advocate of institutional separation of power.,” Bagudu added.

The minister also disclosed that President Tinubu respected the National Assembly in allowing it raise further the exchange rate considering his high respect for institutions and democracy.

“So, he respected democracy that even though it was higher than what he submitted, but the institution that says so, has the authority to say so and even at the time they say 100, because it’s not an official rate it’s tidal, because with the deregulated market, you no longer have an official rate, it is much lower than even the way the markets are bidding.,” the minister noted.

The Minister noted that the Federal Government was sure that with the measures it is currently taking, there will soon be significant increase the supply of foreign exchange into the economy.

The Budget minister who also spoke on the level of borrowing to fund the deficit in the 2024 budget, said that difference between this years borrowing amount compared to 2023 remained significant.

“In 2023, the budget anticipated a borrowing of close to N14 trillion. This year’s budget is N9.1trillion. So we think that is significant. Because it’s 2023 took us to about 6.11 percent of our GDP as borrowing. This one is 3.8 percent. So the quantum had decreased,” Bagudu added.

The Budget Minister explained that the Federal Government within the 2024 fiscal year intends to operate strictly within the dictates of fiscal responsibility law, which provides for the Central Bank of Nigeria (CBN) to lend to the government through its Ways and Means window, only 5 percent of the total budget.

“We will not go outside the law and borrow from ways and means, what is outside the law. So the fiscal responsibility law says, in every one year, the central bank can lend the government up to 5 percent of its budget for the year.

“So if you go out of that, you’re going outside the lawful limit, and that’s what the minister of Finance and Coordinating Minister of the Economy was very clear we are not going to do. We are not going to resort to borrowing outside the law.

“And secondly, as much as possible, we will even borrow away from the central bank because sometimes it’s even cheaper to borrow. So, those are the two elements. So the quantum has decreased, then we will go by the book.

“The President, in his steadfastness has brought a central bank governor who will not even allow and we also determined coordinating minister and I so that’s combination of two.

“And then three, our revenue projections are designed to ensure that everyone earns his job. This is a country that had once produce more than 2 million barrels a day. So why are we behaving as if we can’t achieve that again?

“So the first thing is to ask people and ensure that people begin to run around to earn their job the President said as much. So that’s the basis of confidence and optimism, that combination of those measures on the borrowing and then the emphasis that we must collect.

“We have seen the reforms so far have been the more revenue but we are not stopping there. We believe that our objective to achieve at least 1.8 million production per day is something that has been done before. And with security gains that are increasing with mobilizing of all stakeholders.

“For example, just yesterday, maybe you will have seen even the governors have re-energize the National Economic Council Committee on crude oil theft and prevention. So that governors will say to the extent that is happening in their state, they will take personal responsibility and lead.

“So if all governors can control their states, we assure that things can be done. So because of that we are confident that the revenue projections are achievable and with budget efficiency and discipline we are putting we believe that we won’t recourse to additional borrowing than maybe we will even borrow less,” Bagudu noted. (BusinessDay)

The apex bank also projected less revenue from oil exports in the 2024 fiscal year, just as it declared that total trade from the Nigerian Foreign Exchange Market (NFEM), stood at N18.804 billion in the third quarter (Q3) of 2023.

Mr. Olayemi Cardoso, governor of the CBN, made the assertions in his presentation at the National Assembly Joint Committee on Banking, Insurance, and Other Financial Institutions.

Cardoso explained to members of the joint committee from both chambers of the National Assembly, that the outlook for the domestic economy in Nigeria for 2024 is very positive as both the inflation and exchange rates, would withstand fluctuating pressures on them and get stabilized.

Cardoso said:

“The outlook for the domestic economy remains positive and is expected to maintain a positive trajectory for 2024.

“Inflationary pressures may persist in the short term but are expected to decline in 2024.  Exchange rate pressures are also expected to reduce significantly with the smooth functioning of the foreign exchange market.”

He told the committee that the unification of the exchange rate windows in June 2023, has ushered in a new approach to the management of the exchange rate, aimed at reducing arbitrage, rent-seeking behaviour and speculation in the market.

Cardoso said: “The policy aims at creating a market where the demand and supply of foreign exchange determines the exchange rate.

“The premium has narrowed and our focus on increasing the autonomous FX supply would lead to more stability and further narrowing of the premium.

“Total Trade in the third quarter of 2023, stood at N18.804.68billion. Exports were valued at N10.346.60 billion while total imports stood at N8.457.68 billion.

“This represents a positive trade balance which would lead to an increase of the external reserves.”

He however stated that due to domestic prevailing factors, less revenues would be earned from oil exports in 2024.

He said: “We expect less revenue from oil exports due to the production limit of 1.78mbpd in 2024. The OPEC-approved quota for Nigeria is 1.8mbpd, which is higher than the 2024 budget assumption.

“However, the country’s production has been below these thresholds. The budget benchmark for 2023 was 1.69mbpd, but the highest level of production during the year was about 1.35mbpd in Q3 of 2023.

“The reasons for the underperformance of the oil production target include crude oil theft and pipeline vandalization, production shut-ins, and divestments by major oil companies.”

Earlier, before the CBN Governor’s presentation, Senator Tokunbo Abiru, the chairman of the joint committee, said the interactive session was organized for the statutory briefing by CBN in line with extant laws.

Bahir Bello El-Rufai, the co-chairman of the committee, in his remarks, commended the CBN governor and the entire management team on measures being put in place to stabilise the economy generally. (Nation)

The financial industry in Nigeria has experienced a significant amount of system liquidity, primarily due to sustainable high Federation Account Allocation Committee (FAAC) allocation, among other contributing factors.

It is expected that with the removal of fuel subsidy and floating of the exchange rate, the high liquidity trajectory will be sustained in the nearest future.

To navigate the current low-yield environment with high liquidity levels, investors must adopt a long-term strategy that involves purchasing long-dated investment securities. This will help you achieve better investment returns over time.

However, this surge in liquidity was temporarily disrupted by the Central Bank of Nigeria’s (CBN) significant Cash Reserve Ratio (CRR) debits to banks, resulting in a prolonged period of negative liquidity in Q1, 2023 into Q2, 2023.

Despite the removal of subsidies in late May 2023, the market has experienced increased activity due to a boost in liquidity. This is further supported by the anticipated FAAC allocations and bond coupon payments expected in Q3, 2023.

Similar to the Covid-19 pandemic, the current policy landscape offers a chance for smart, long-term investments due to the loose monetary and fiscal policies in place. Recall that yields on short-term government securities in the latter part of 2020 declined to 0%, and longer-term bond yields averaged 4%, as shown in the chart below.

Savvy investors can leverage the current liquidity surge by adopting a long strategy focused on acquiring long-dated investment solutions such as Bond Funds, Stock Funds, Target-Date funds have exposures to long-tenured instruments.

By doing so, they can secure higher coupon rates, and maximize their returns over the investment horizon.

Historical data indicates that towards the end of the COVID year when there was high system liquidity due to loose economic policies, investors who went long early in the cycle and positioned themselves at the longer end of the yield curve benefited greatly.

A case in point was the FBN Bond Fund which returned 18.37% by 2020FY, higher than the inflation figure in that year (13.25%).

Drawing from this experience, investors can make prudent decisions and prioritize longer-term investments (1-3 years) to preserve and grow capital amidst the current liquidity abundance.

Embracing a long-term investment strategy can help investors navigate the current economic landscape and capitalize on the opportunities presented by the increase in statutory allocations due to subsidy savings.

Isah AbdulMumin, the spokesperson for the bank’s Communications department, stated that the dollar was traded at N465/$1, contradicting the reports suggesting otherwise.

In a statement, AbdulMumin emphasized that the news report in question contained falsehoods and misleading implications, displaying a potential lack of understanding regarding the functioning of the Nigerian Foreign Exchange Market.

He clarified that the exchange rate at the Investors’ & Exporters’ (I&E) window stood at N465/US$1 on the morning of June 1, 2023, and has remained stable at this level for some time.

The I&E foreign exchange (FX) window is the country’s official exchange rate window. It is the market trading segment for investors, exporters, and end-users that allows for FX trades to be made at exchange rates determined based on prevailing market circumstances.

Earlier reports by a newpaper outlet claimed that the Central Bank of Nigeria devalued the naira to N630/$1 from N461.6/$1 on Wednesday.

An anonymous source, quoted by the media outlet, indicated that the dollar was indeed traded at the new rate on the Importers and Exporters Window during the same day

According to a paper posted on the World Bank website, the CBN’s method of managing currency rates cost the nation a staggering $144.1 billion between 2017 and the first quarter of 2021.

The CBN’s different exchange rates “function as an implicit tax charged by the CBN on federation revenue,” the institution claims.

A lot of attention has been paid to how the CBN manages Nigeria’s foreign exchange policy.

Despite suggestions for a flexible exchange rate in the official window from a number of organizations, including the World Bank and the International Monetary Fund, the Governor of the Central Bank has insisted on the continued use of the current controlled float system.

A managed floating exchange rate, to put it simply, is a system where currencies fluctuate daily but the Reserve Bank of India and other regulatory bodies may intervene to control and stabilize the value of the currency.

While a floating (or flexible) exchange rate regime is one in which a country’s exchange rate fluctuates in a wider range and the country’s monetary authority makes no attempt to fix it against any base currency.