Following the continued depletion of Nigeria’s external reserves as a result of dwindling crude oil prices and huge demand for the dollar, experts in the nation’s financial sector have stated that the federal government may have to sell its assets to foreign investors to shore up reserves, ThisDay reports.
Data released by the Central Bank of Nigeria (CBN) last Friday showed that the nation’s external reserves fell to $28.1 billion on January 28, the lowest level since 2005. Before the slide in the oil price, Chinese investors were said to have offered $70 billion for the Nigerian National Petroleum Corporation (NNPC) joint-venture interests. However, analysts at FBN Capital stressed that the valuation of these assets would have since fallen sharply as a result of the decline in crude oil prices.
Speaking on how Nigeria got into this situation, the analysts blamed past governments for failing to build solid buffers when oil prices permitted. They also said that they failed to see what could take up the slack before the oil price recovers. They added, “From a balance of payments (BoP) perspective, devaluation would not make much difference. A devaluation would boost certain non-oil exports, mostly agricultural, but these amounted to just $4.5 billion in total in 2013.