Finance
Is the economy poisoned by CBN $ hoarding?
By Henry BOYO
LAGOS-THE crash in crude oil prices from over $145 in 2008 to below $40/barrel presently, has invariably reduced Nigeria’s export earnings by over 50%; consequently, the significant deflation in dollar income is commonly blamed for the persistent intense market pressure on the Naira exchange rate. Interestingly, this perception is, ironically, against, the actual reality that the Naira exchange rate remained static between N152-N160/$1, even when the foreign reserves in CBN’s custody exceeded $60bn.
Incidentally, after 2006, the IMF’s ‘Policy Support’ recommendation to liberalise dollar supply and stabilise Naira exchange rate, soon became an article of faith in CBN’s monetary policy management. Ultimately, almost 3,000 BDCs became licensed to sell weekly dollar allocations supplied from CBN’s reserves. Curiously, dollar allocations to BDCs often exceeded the monthly provision for the real sector, despite their indisputable role as engine of economic growth and prime creators of employment opportunities.
Curiously, however, personal Naira debit cards were actively promoted by the banks, with CBN collaboration to enable Nigerians cash up to $150,000 from ATMs abroad at the official Naira rate, even when it is clear that possibly less than 1% of Nigerians earn N15m annually. Clearly, such uninhibited dollar supply clearly promotes widespread money laundering and liberal imports of contraband which undermine governments’ declared intentions to support local industrialists and create more jobs.
Ironically, while billions of dollars are offered to the BDCs and Nigerian travellers at official rates, some local manufacturers are denied access to CBN dollars and are therefore invariably constrained to fund their dollar needs at over N240/$1, while other equally genuine industrialists may also have to remain in bank queues for several weeks before they obtain forex cover for their critical raw material imports.
Besides, it is certainly irrational for CBN to gleefully sell ‘our’ dollar reserves at face value to BDCs and tourists , while government is simultaneously busy borrowing same dollars externally with an unnecessarily high cost. Nevertheless, the CBN remains resolute that its forex control measures are absolutely necessary to protect the Naira exchange rate and by extension our economy and the welfare of our people .
Evidently, however, the present wide difference between an official (read as subsidized) rate of N197 and the open market price of N240=$1 would expectedly create potentially serious market distortions and threaten economic and general price stability. The above realities notwithstanding, CBN management proudly positions itself as credibly performing its role as the constitutional defender of the Naira Exchange rate with dollar reserves in its custody!
Incidentally, however, if the slide in crude revenue persists, Nigerians may begin to question why fuel imports, Corporate dividends and Technical fees, which consume about 80% of our total forex income, are subsidized with cheaper forex allocations when a significant segment of the real sector, is conversely forced to endure higher black market exchange rates to import those critical inputs they require to produce and create jobs locally.
Regrettably, If this imbalance persists, we may ultimately become helpless against the challenge of cheaper imports of finished consumer goods flooding our markets, forcing factory closures and throwing more Nigerians into an already saturated job market. Nonetheless, it is necessary to examine how CBN accumulates its dollars, since the Apex bank clearly does not engage in the production and export of goods or services that could sustainably fund its relatively high reserves base.
Firstly, we may need to ask who actually owns the reserves in CBN’s custody? Indeed, if the Nigerian Federation truly owns the dollar reserves in CBN’s custody, it would be unexpected and inexplicable for government to simultaneously resort to funding its programmes with external borrowing with higher interest rates when infact it has $30bn idle deposits, which earn minimal or nil yield in CBN vaults and accounting records.
Curiously, in 2013, former President Jonathan, paid a business visit to China with a distinguished delegation which included Ngozi Okonjo-Iweala, Finance and Co-ordinating Minister of the Economy, and Lamido Sanusi, former CBN Governor; while President Jonathan went in pursuit of a $3bn loan package for the enhancement of aviation, railway and marine infrastructure from Export-Import Bank of China and China Development Bank, Lamido Sanusi, the CBN Governor conversely reported that his mission was to assess how some of the CBN’s surplus reserves of about $40bn could be held in alternative currencies such as the Chinese Yuan.
Clearly, the import of the preceding scenario is that CBN reserves are not actually consolidated to bring respite from those social and infrastructural deprivations Nigerians suffer. Furthermore, what infact stops the Chinese Bank from selling Chinese Yuan or at best borrowing Sanusi’s dollar reserves for below 3% and turning round to lend the same funds to President Jonathan’s delegation with a higher interest rate.
The begging question however, is , how can CBN confidently lay sole claim to the dollar cache that is, in the light of the preceding, obviously erroneously called our National reserves. Evidently, the level of CBN’s reserves clearly has nothing to do with any direct economic activity of the Bank. Instructively, therefore, the CBN consolidates its reserves by retaining Nigeria’s export dollar revenue from crude oil and substituting Naira allocations at its own unilaterally determined exchange rate before the distribution of bloated Naira sums to the constitutional beneficiaries of the Federation pool.
So, while the three tiers of government are fed with increasingly worthless Naira values, the CBN ‘wisely’ keeps all the dollars we earn; consequently, any fortuitous increase in dollar revenue for whatever reason, will also increase the burden of systemic Naira surplus which ultimately fires inflation and also induces weaker Naira exchange rates, as the resultant excess Naira supply chase the small rations of dollars that the CBN ironically auctions from time to time TO DEFEND THE NAIRA.
In addition, the subsisting Naira surplus unfortunately induces, highly oppressive cost of funds and also discourages investment and job creation as the same CBN which initially instigated the Naira surfeit, impulsively spikes its benchmark interest rate to banks, to discourage consumer borrowing and liberal spending as a strategy against a threatening inflationary spiral.
Technically, reserves are normally defined as any excess to immediate requirement; consequently, the real reserves we own are those deposits which are constitutionally consolidated from any revenue earned in excess of annual budget projections, and warehoused in the Excess Crude Account and Sovereign Wealth Fund. Consequently, we may once more ask, who owns the reserves? Surely, it would be unconscionable if the three tiers of government also subsequently lay claim to all the dollars in CBN’s custody after they have readily accepted and consumed the substituted Naira allocations. Surely, you cannot have your cake and eat it.
SAVE THE NAIRA! SAVE NIGERIANS.
-Vanguard
Nigerisa’s Vice President Kashim Shettima
By Modupe Asudo
The 2026 edition of the African Continental Free Trade Agreement (AfCFTA) Summit got underway in Lagos on Monday with regulatory agencies, project promoters, and financial institutions focused on deepening intra-Africa trade, a unified code of standards for professional qualifications and manufactured goods, and expansion of the frontiers of technological development and innovation.
Critical questions addressed include how AfCFTA’s 1.4 billion population and $3.4 trillion economy could achieve “a strategic shift from fragmented economies towards a globally competitive supply chain system”; how Africa could leverage its vast mineral resources, including copper, iron ore, petrochemical, for domestic production of hardware such as Christmas tree (an assembly of valves, fittings on top of a wellhead to control oil production), and how, hypothetically, Tema Shipyard in Ghana could be designated the vessel construction, assembly and repairs hub for Africa.
Related questions were how cables manufactured in Nigeria, hypothetically, could benefit from favourable trade terms in Angola; what compliance requirements a sacrificial anode producer in Nigeria would have to meet in regard to the rule of origin requirement to export anodes to Algeria for protection and longevity of pipelines, storage tanks, offshore platforms, etc., and what other support levers would be required to achieve energy security for Africa besides expanded refining capabilities in Dangote Refinery, laying of continental gas transmission pipelines, and establishment of industrial parks and other support infrastructure.
In a keynote address at the event, the Executive Secretary of the NCDMB, Engr. Felix Omatsola Ogbe, represented by the Director, Corporate Services, Dr. Abdulmalik Halilu, disclosed that Nigeria’s oil and gas industry embraced AfCFTA and developed a framework for domesticating the policy in 2022.
According to him, implementing AfCFTA in the industry was anchored on three broad pillars, namely, Opportunities Identification, Capacity Development, and Capacity Exportation. In regard to opportunities, he said Nigeria’s strength lies in formidable supply chain in oil field services, refining capacity, oil field logistics base, gas supply pipelines, and a pool of qualified oil field technical workforce.
On capacity development, he pointed out that Nigeria’s oil and gas industry, through the local content law, has developed capabilities in the oil and gas value chain spanning marine vessel asset ownership, fabrication, assembly and installation of production systems, including Christmas trees, pressure vessels, and pumps.
What remains unresolved, described by the Executive Secretary as “the next frontier and the reason for convening the Summit,” is capacity exportation. He posited for consideration a unified work permit and visa that would enable, say, “a welder in Senegal to be engaged in Arlec Engineering Works, Johannesburg, South Africa, for fabrication of heat exchangers, storage tanks, pressure tanks, pressure vessels, etc.”
In examining the importance of achieving continental economic integration, Engr. Ogbe explained that strong regional supply chains would shift Africa from exporting raw materials to producing high-value goods. For pathways to integration, he listed regional value chains, infrastructure connectivity, regulatory harmonization, industrial clusters, and small and medium scale enterprises (SME) inclusion.
He assured industry stakeholders and participants maximum support by the NCDMB.
By Modupe Asudo
The Nigerian Content Development and Monitoring Board has outlined a practical framework for positioning Nigeria’s energy sector to access the African Continental Free Trade Area, following a strategic webinar focused on meeting rules-of-origin requirements for continental trade.
The Board held a pre-conference webinar on Wednesday ahead of the Nigeria Local Content AfCFTA Energy Summit scheduled for Monday, February 9, 2026.
The engagement was attended by stakeholders from the oil and gas, power and renewable energy sectors, and they addressed how Nigerian products and services can qualify for preferential market access across 54 African countries with a combined gross domestic product of $3.4tn and a population of about 1.4 billion people.
Entitled ‘Meeting AfCFTA Origin Requirements in Energy Trade’, the webinar focussed on one of the major barriers facing Nigerian exporters under AfCFTA — structuring production and operations to meet origin requirements that determine eligibility for duty-free and preferential trade.
The initiative was supported by the Executive Secretary of NCDMB, Engr. Felix Omatsola Ogbe, and the Acting Director of Planning, Research and Statistics, Mr. Ene Ette, as part of preparations for the forthcoming Nigeria Local Content AfCFTA Energy Summit, with the theme ‘Unlocking Africa’s Energy Future through AfCFTA: Trade, Innovation and Regional Integration’.
Speaking during the session, a communications analyst, Joseph Nwokedi, representing the Acting National Coordinator of Nigeria’s AfCFTA Coordination Office, Mrs Patience Okala, stressed the central role of energy in Africa’s economic integration under AfCFTA.
He urged Nigerian companies to shift their focus from Nigeria’s domestic market of about 200m people to the wider continental market of 1.4bn consumers.
“Without energy, there’s no industrialisation. Without energy, regional value chains remain aspirational,” Nwokedi said. “With AfCFTA, energy transforms from a domestic infrastructure issue into a tradable, investable and exportable sector within an integrated African market.”
He noted that even one per cent penetration of the African market translates to about 14m consumers, underscoring the scale of opportunity available to Nigerian energy firms.
The webinar identified four key pathways through which Nigeria’s energy sector can participate in AfCFTA-enabled trade. First, Nigeria’s Electricity Act of 2023 allows independent power producers to supply electricity directly to industrial clusters and export processing zones, positioning power generation as a foundation for trade-ready manufacturing.
Second, the country has submitted commitments under AfCFTA that enable professionals such as engineers, electricians, geophysicists and energy auditors to export services across Africa, subject to mutual recognition of qualifications.
Third, refined petroleum products, gas derivatives, electricity and renewable energy components can be traded across borders under preferential tariffs, provided they meet AfCFTA rules of origin.
Fourth, AfCFTA’s investment protocol, combined with recent domestic reforms, including the Presidential Directives on Investment Incentives for 2024–2025, strengthens Nigeria’s credibility for attracting cross-border investments in power generation, transmission, renewable energy and storage infrastructure.
Delivering a technical presentation, Assistant Comptroller of Customs, Burhan Sulaiman, explained that AfCFTA would eliminate tariffs on 90 per cent of goods traded within the bloc over five to 10 years, with an additional seven per cent liberalised over 13 years. However, he stressed that these benefits were conditional on meeting origin requirements.
“Companies lose benefits because origin was treated as an afterthought,” Sulaiman said. “You must build in origin compliance from the beginning, not while already running your project. Origin determines whether you export duty-free or pay full tariffs.”
He clarified that origin is determined by where economic production takes place, not by company ownership or registration. Foreign-owned companies producing in Nigeria can export as Nigerian origin, while Nigerian companies importing finished goods cannot claim AfCFTA preferences.
Sulaiman explained that products qualify for preferential access through two routes. “Wholly obtained” goods are entirely produced within AfCFTA member states, such as crude oil and natural gas extracted in Nigeria, as well as locally generated electricity regardless of fuel source.
The second route, “substantial transformation”, applies where foreign inputs are used and requires compliance with one of three tests: a change in tariff classification; a value-addition threshold limiting foreign content to between 30 and 60 per cent of ex-works price; or completion of specific prescribed processes such as distillation, cracking or reforming for petroleum products.
He provided sector-specific guidance, noting that in oil and gas, locally extracted crude and gas qualify, just as refined petroleum products that meet processing requirements. However, simple blending, basic distillation operations and modular refineries using imported crude without substantial transformation do not qualify.
In the power sector, he explained, locally generated electricity and regionally manufactured equipment with deep component transformation qualify, while installation-only activities, imported turbines, transformers and switchgear mounting do not.
“For renewables, regional solar cell and battery cell manufacturing with deep component processing qualify,” he said, adding that panel installation alone, simple module assembly and packaging imported batteries do not meet the thresholds.
Sulaiman warned that without regional manufacturing accumulation, power equipment exports fail origin tests.
According to him, the Nigeria Customs Service applies a five-step verification process for origin claims, including confirming accurate HS codes, reviewing production records, testing for minimal operations, verifying African input origins and ensuring consistency across certificates, production records and cost documentation.
“Weak documentation kills origin claims. Even genuinely originating products can be denied if documentation is incomplete or inaccurate,” he noted.
Both speakers emphasised that origin compliance should be treated as a core business strategy rather than a regulatory formality.
“Origin is not paperwork; it is strategy,” Sulaiman said. “It shapes where you locate facilities, how you source inputs, and where you sign regional contracts. Treat it as strategic from day one.”
Nwokedi urged Nigerian firms to act early. “AfCFTA is happening now. Early movers will shape supply chains, standards and partnerships. Are you going to lead, or simply follow?”
Officials also provided updates on AfCFTA implementation, noting that 92 per cent of rules of origin had been agreed, with negotiations ongoing in the textiles and automotive sectors.
An online dispute resolution mechanism has been established to coordinate Customs authorities, standards bodies and complainants.
Nigeria has deployed a fully operational electronic certification system for paperless trade, while Nigerian Customs is introducing risk-management frameworks that could allow exporter self-certification on commercial invoices.
Following a five-year implementation review led by the Minister of Industry and Investment, Dr Jumoke Oduwole, government sensitisation efforts have intensified through partnerships with the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture; Women’s Chambers of Commerce; zonal outreach programmes and ‘P3 engagements’ involving the press, private sector and public institutions.
“The government will not trade under AfCFTA — our exporters will,” officials said. “If they win, we win.”
Nigerian Customs also reiterated its open-door policy for pre-export origin verification to help businesses avoid delays and additional costs at the border.
The webinar highlighted Nigeria’s potential as a regional energy and transition-fuel hub, building on frameworks such as the West African Power Pool to support cross-border electricity trade.
Key recommendations included structuring projects for origin compliance from inception, forming regional joint ventures, aligning with continental standards and leveraging AfCFTA service commitments to export Nigerian energy expertise.
The session ended with confirmation that the webinar was a technical precursor to the Nigeria Local Content AfCFTA Energy Summit, which will convene policymakers, industry leaders and trade experts to develop strategies for maximising Africa’s energy potential under the AfCFTA framework.
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