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Accumulating Foreign Reserves: What’ll Jesus Do?

The fourth year of President Muhammadu Buhari’s administration is winding up. It’s now clear to anyone following that Nigeria’s accumulating Foreign Reserves during his tenure has been penned down as proof of prudent economic management (i.e. savings), to be repeated tirelessly by campaign team during his 2019 re-election bid. Like technically defeating Boko Haram, this too is false. But increasingly worrying, media observers are regurgitating the Foreign Reserves claim as ‘fact’ without scrutiny. Like Channels TV’s Ajuri Ngelale, here.

For clarity sakes, ‘Foreign Reserves’ is the wrong measure of national savings.  Controversial Excess Crude Account and improved version, Sovereign Wealth Fund, are. 

Also, the much touted Foreign Reserves increase from $28.6 billion when Buhari took office in May 2015, to $47.6 billion as at May 2018, has been artificial. Thus, not by corresponding increase in national exports (which halved over the period, compared to 2013 export value), but by misguided government meddling, similar to what we’re told the timid servant did in The Parable of Talents and earned the Master’s rebuke. 

Nigeria’s Foreign Reserves (mainly in US Dollars) are a combination of crude oil sales, foreign loans and investments, Diaspora remittances to family and friends via Western Union, Money Gram or bank transfers, and foreign aid. The USDs are domiciled at the Central Bank of Nigeria (CBN), where Naira equivalent is raised and pumped into the system: to the government or banks, accordingly. 

Of course, afterward, the USDs aren’t simply warehoused by CBN. Since the Nigerian Naira isn’t an internationally accepted legal tender, and the USD is, they’re traded to every Nigerian citizen/resident or business who need to fulfil financial obligations overseas – whether shipping goods or employing expatriates; or school and medical fees; or international holiday – through their banks/bureaux de change, at the going exchange rate.

However, with government policies starting 2015 – to deny sale of USD at CBN to the public for importing 41 items, for foreign school and medical fees, and to independent oil marketers – President Buhari, in effect, began hoarding dollars in the Reserves. As foolhardy as that servant who, for fear, wrapped his master’s One Talent in handkerchief, refusing to “Engage in business until I come” as instructed. 

As a result, the Nigerian public have suffered unnecessary despair. Food inflation has skyrocketed while wages stagnated, and declined in value to a quarter in USD. Budding and well-established businesses have shutdown with attendant job losses and shrinkage of economy. As study show, jingoism that accompanies recessions has heightened. And, for a first time, “a disturbing trend of suicide” has been observed in Nigeria.

Presiding over this disaster, President Buhari, like the parable’s indolent servant, expects commendation from his Master (the Nigerian electorate) for, at least, not making a loss. But we know Jesus concludes the parable saying the Master returned to take accounts of seed monies given to his servants for business. And cursed the indolent servant for failing to turn a profit: You wicked servant! Further transferring money the servant had saved to servants who had shown wit and entrepreneurship.

And that should be the loud rebuke of Nigerians, in the majority, to President Buhari, using their thumbs in the quiet of the polling booth on election day in 2019: “Go away… you wicked servant!” 



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