Business
Nigeria’s ‘rented foreign reserves’ increase risk perception
ABUJA – The continued reduction in the accretion to Nigeria’s foreign reserves, currently at $41.5 billion, and foreign portfolio investments (FPI) accounting for about $20 billion of this amount raises the risk perception about Nigeria’s economy, BusinessDay interaction with economy watchers has revealed.
“The over $20.0 billion of the total foreign reserves being inflow from FPIs calls for concern, in view of the gradual phase-out of the US Fed stimulus programme in 2014,” say Afrinvest analysts. “Based on this development, it becomes imminent that the ‘rented reserves’ may depart the country sooner than we anticipate.”
Consequently, any portfolio reversal as a result of the United States quantitative easing will leave the country with no option than to borrow, with the resultant effect of higher yields on the Federal Government bonds and, consequently, increase in the level of recurrent expenditure.
For instance, government interest on domestic debt has been on the increase, from N495.1 billion in 2011 to N559.5 billion in 2012, to N591.8 billion in 2013 with N712 billion projected for 2014, in addition to the N300 billion CBN interest on T-Bills and Open Market Operations (OMO).
Some other analysts argue that the sustenance of foreign reserves on portfolio investments or ‘hot money’ portends more vulnerability of the economy to the whims and caprices of investors who may take advantage of the opportunities provided by the easing in the US market to embark on reversals.
Doyin Salami, a member of the Monetary Policy Committee (MPC) of the CBN, said at a recent meeting of the committee that he sees the deterioration in foreign reserve position as a reflection of a slowdown in inflows from foreign portfolio investors (FPI), adding that “FPI inflows, at $19.182 billion in 2013, accounted for approximately 82 percent of capital importation in 2013”.
Afrinvest analysts further say that if this happens, and coupled with the reduction in the accretion of the foreign reserves, then the risk perception about Nigeria would rise drastically.
“In addition, the reserves ($21.5 billion, assuming it remains at present level) may cover below three months of imports (below global requirement). This would also increase the country risk premium placed on Nigeria, hence an increase in the yields on FGN bonds,” say Afrinvest analysts.
“This increase will raise the cost of borrowing to the government, further snowballing its re-current expenditure (over 65.0 percent in 2014). The country may also find it challenging to raise additional funds through Eurobonds and may be lured to raise the coupon to what is commensurate with perceived risks,” they add.
Samir Gadio, emerging markets analyst at Standard Bank, London, observed that the accumulation of FX reserves in 2012 and early 2013 was a function of increased portfolio inflows which subsequently dried up and even turned negative recently.
Gadio wondered why Nigeria has been unable to rebuild its fiscal buffers despite the robust oil price over the past few years, which appears to reflect a moderate drop in oil output, stressing that possible revenue leakages and prior to this, the fuel subsidy scam, could be responsible.
“On top of the regular budget augmentation disbursements, the ECA funds have also been shared among the three tiers of government to fund ‘people-oriented projects’, but there is little tangible investment to account for,” said Gadio.
Gadio sees this as a serious problem as, according to him, the balance of the ECA declined to a low of USD2.5 billion in January, which is less than 1 percent of GDP (vs a median of 65 percent of GDP among major oil producing countries).
“Should this trend persist,” he added, “Nigeria will remain vulnerable to long-run oil boom and bust cycles, and a potential prolonged decline in the oil price below the USD100 pbl level at some stage in the future would seriously threaten the country’s macroeconomic position.”
Uche Chibuike, a member of the MPC, at the recent committee meeting, observed that recent international developments had already ensured a slowdown in the inflow of such speculative capital.
“Despite this, I find it prudent to continue to express my concern about speculative capital. This is because the vulnerability of the value of our currency in recent times has at least in part been as a consequence of the unstable nature of such speculative FDI. The earlier we begin to discourage such capital flows, the better. While FDI is desirable, it only makes sense when it is invested in the real sectors of our economy,” he said.
Ganiu Garba, also a member of the MPC, at the recent meeting attributed the problem to a non-forward-looking and non-strategic management of oil and gas resources with the consequent inability to sustain inflows of forex revenue to support and sustain some of the economic buffers.
“A strategic and forward-looking management of oil and gas resources is critical to building the forex reserves required to support a stable currency,” Garba said.
– BUSINESS DAY
With a view to improving operational efficiency, safety, compliance and service delivery across its operations, Pinnacle Oil & Gas Limited has reaffirmed commitment to building stronger relationships with its vendors.
The company made the commitment at its 2026 Vendors’ Forum held in Lagos under the theme, “Partnering for Operational Excellence,” with the sub-theme, “Strengthening Partnerships Through Compliance, Safety, Performance and Innovation.”
The forum brought together more than 100 existing and prospective vendors as well as key stakeholders, both physically and virtually, to strengthen collaboration and align suppliers with the company’s operational standards and growth strategy.
Speaking at the event, Managing Director and Chief Executive Officer of Pinnacle Oil & Gas, Adenike Labinjo, described vendors as strategic partners whose commitment to quality, innovation, safety and compliance is critical to the company’s success.
She said as Pinnacle continues to expand its operations, it has become increasingly important for the company and its vendors to share a common understanding of expectations, responsibilities and performance standards.
Labinjo stressed that safety, regulatory compliance and ethical business practices remain non-negotiable in all engagements with suppliers.
She noted that stronger collaboration with vendors would help the company deliver greater value to customers and other stakeholders while supporting sustainable business growth.
The forum featured technical presentations by senior executives from the company’s Procurement, Engineering, Compliance, Finance, Legal, Health, Safety and Environment (HSE), and Sales and Marketing departments.
Participants received guidance on Pinnacle’s procurement procedures, vendor onboarding and prequalification processes, Know Your Customer (KYC) requirements, tax invoicing, payment processes, contractual obligations, technical specifications, contractor responsibilities, supplier performance expectations and Service Level Agreements.
The company also unveiled improvements to its Purchase Order (PO) process aimed at improving efficiency, transparency and ease of doing business with vendors.
A major highlight of the event was an interactive question-and-answer session where vendors engaged directly with the company’s leadership on procurement procedures, compliance requirements, project execution, HSE standards and areas for continuous improvement.
According to Pinnacle, the session reinforced its commitment to transparency, open communication and stronger collaboration with suppliers.
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The company also recognised outstanding vendors whose contributions have supported its operational performance over the past year. Five companies received Certificates of Recognition for exceptional service delivery, innovation and partnership.
The award recipients were Great Grace Enterprise for Outstanding Delivery Performance, Cevets Nigeria Limited for Excellence in Project Delivery, Ceezik Projekts for Outstanding Quality, Diadco Nigeria Limited for Outstanding Responsiveness, and Sephill Innovative Solutions Limited for Best Commercial Value.
On the significance of the forum, Head of Procurement and Administration, Oluseyi Ogunfowora, said the initiative reflects Pinnacle’s determination to build stronger partnerships through transparency, collaboration and shared accountability.
She explained that the procurement function coordinates the requirements of Engineering, Operations, Marine, Compliance, Legal, Finance, HSE and other business units to ensure a fair, efficient and transparent procurement process.
Ogunfowora urged vendors to submit complete and compliant documentation, communicate proactively and seek clarification whenever necessary.
“The success of our business depends on the strength of our partnerships,” she said. “When vendors clearly understand our expectations and we work together with transparency, compliance and open communication, we create a high-performing vendor ecosystem that benefits everyone.”
She added that the 2026 Vendors’ Forum forms part of Pinnacle’s broader strategy to strengthen supplier engagement, improve operational efficiency and reinforce a culture of compliance, safety, innovation and continuous improvement throughout its value chain.
Poised to help in addressing the shortage of skilled technical manpower locally, the Nigerian Content Development and Monitoring Board (NCDMB) has graduated 50 Nigerians as certified crane operators under a specialised training programme, which empowers them with global standards in the trade.
The four-week Crane Operations Operator Level I and II Training Programme, implemented in partnership with Zigma Limited, equipped participants with internationally recognised technical knowledge, practical operating skills and safety competencies required for crane operations across the oil and gas, construction and industrial sectors.
During the graduation ceremony, the Executive Secretary of NCDMB, Felix Ogbe, represented by Halvin Okonmah, explained that the initiative forms part of the Board’s commitment to developing Nigerian professionals capable of meeting the industry’s growing technical manpower needs.
He said the programme aligns with the Board’s statutory mandate under the Nigerian Oil and Gas Industry Content Development Act (NOGICD) to build human capital, expand opportunities for Nigerians in specialised technical roles and deepen local participation in the energy sector.
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According to him, the training will strengthen industry capacity while fostering innovation, partnerships and sustainable growth.
“This event will foster stronger partnerships, inspire fresh ideas and deepen the development of skilled local capacity for the benefit of our industry and our nation,” he said.
He urged the graduates to uphold the Board’s core values of patriotism, professionalism, integrity, creativity, passion and teamwork.
The Managing Director of Zigma Limited, Funmi Ogbue, represented by the company’s Chief Operating Officer, Ojinika Mba-Kalu, described the graduation as a milestone in developing Nigeria’s technical workforce, stressing that the country’s industrial future depends on investments in skilled manpower.
She said participants received intensive classroom and practical training covering crane operating principles, lifting operations, equipment inspection, load handling techniques, signalling and communication, hazard identification, risk assessment, and Health, Safety and Environment (HSE) standards. “This is a testament to what can be achieved when institutions, industry and individuals unite around a common purpose of building the capacity of Nigerians to compete, excel and lead within our nation’s oil and gas industry,” she said.
Ogbue added that Zigma would continue collaborating with government agencies and industry stakeholders to deliver more capacity-building programmes capable of producing globally competitive Nigerian professionals.
Presenting the project report, Zigma’s Project Manager, Amy Nwadiaro, disclosed that the programme attracted significant interest nationwide, with 355 applications received. Following a rigorous selection process, 65 applicants were shortlisted for screening, while 50 participants were eventually admitted into the training.
She said all 50 trainees successfully completed the programme, representing a 100 per cent completion rate.
“The response to this initiative was overwhelming. We received 355 applications, shortlisted 65 candidates for screening and admitted 50 participants, all of whom successfully completed the programme,” she said.
On behalf of the graduating trainees, Evidence Ojie described the programme as practical proof that Nigerian Content development extends beyond policy declarations to tangible investment in local talent.
He said the training provided participants with critical competencies in boom set-up, working range calculations, load chart interpretation and safety margins required for offshore and industrial crane operations.
According to him, the knowledge acquired would enable the graduates to compete effectively for technical roles on rigs, offshore platforms and industrial facilities both within Nigeria and internationally.
Industry stakeholders at the event also underscored the importance of certified crane operators in improving workplace safety, reducing operational accidents and enhancing efficiency in high-risk sectors such as oil and gas, construction and heavy industry.
Improved operating performances have seen Eterna Plc report higher revenue and profitability for the second quarter and half-year ended June 30, 2026.
The company’s unaudited consolidated financial results showed that revenue rose by 38 per cent to N217.31bn from N157.65bn in the corresponding period of 2025.
The results show that gross profit more than doubled to N15.99bn, while operating profit increased to N8.78bn from N2.34bn. Profit before tax rose by 389 per cent to N7.67bn from N1.57bn recorded in the corresponding period of 2025.
Profit after tax (PAT) increased to N5.88bn from N573.81m, while earnings per share (EPS) improved to N2.69 from N0.44.
The company also reported an improved financial position, with total assets standing at N82.75bn as of June 30, 2026.
Cash and bank balances increased to N20.36bn from N4.79bn as of December 31, 2025, while total liabilities declined to N51.22bn from N84.43bn. Total equity rose to N31.53bn from N7.77bn, reflecting stronger liquidity and capitalisation.
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On the results, the Managing Director/Chief Executive Officer, Dr. Jude Nwaulune, said, “These results demonstrate the strength of our business and the impact of disciplined execution across our operations. The significant improvement in profitability and financial position provides a solid foundation to advance our growth priorities.
“The successful Rights Issue has further strengthened our balance sheet, resulting in a healthy leverage position, stronger equity and improved net assets. We remain focused on expanding our retail, aviation, lubricants and gas businesses, improving operational efficiency and customer experience, and delivering sustainable value to shareholders and other stakeholders.”
The company said its full unaudited consolidated financial statements for the half-year ended June 30, 2026, are available on its website.
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