Abati: I thought I could rattle Tinubu during media chat — but he knows what he’s doing

by Daniel Adaji

Nigeria experienced a 6.28 per cent decrease in its total direct foreign exchange remittances in the first quarter of 2024, amounting to $282.6m.

This is according to data on the Central Bank of Nigeria website on Monday.

This current value represents a decline from the $301.57m recorded in the same period of the previous year.

Nigeria’s direct foreign exchange remittance refers to money transfers from a Nigerian to family members or other individuals in the country.

The inflow of direct remittances into Nigeria is facilitated through various channels, including International Money Transfer Operators and banks.

Experts note that Nigeria’s FX inflows are primarily derived from four key sources: Oil export proceeds, non-oil export proceeds, diaspora remittances, and foreign direct and portfolio investments.

On month-by-month, there was an increase in direct remittances, with a total of $138.56m received, marking a 75 per cent growth from January 2023’s $79.19m. Remittances fell to $39.15m, a 53.26 per cent drop from $83.76 million in February of the previous year.

The downward trend continued in March, with remittances totalling $104.91m, a 24.3 per cent decline from March 2023’s $138.63m

Nigeria’s Net foreign assets have also risen by 364 per cent to N35.78tn in March 2024 from N7.40tn in February.

The data, sourced from the CBN’s website, showed a decline in the Net Domestic Asset from N88.14tn in February to N56.55tn in March, a staggering 50 per cent decrease within a single month.

Net Foreign Assets represent a nation’s holdings of assets in foreign countries minus the foreign-held assets within its borders.

A positive NFA indicates that a country has more assets abroad than foreign-held domestic assets, making it a net lender to the rest of the world. Conversely, a negative NFA means the country is a net borrower, with more foreign-held domestic assets than assets abroad.

The NFA is also reflective of a country’s transactions with the rest of the world over time, particularly its current account, which includes trade balance, net income, and transfers.

On the other hand, Net Domestic Assets refer to the total assets within a country’s borders minus the liabilities. It’s a measure of the domestic capital available after accounting for the depreciation of assets.

Net Domestic Credit is a financial metric that represents the total amount of credit extended by the financial sector within a country to its government and private sector.

Furthermore, the country’s net domestic credit also witnessed a downturn, dropping from N114.78tn in February to N90.80tn in March.

The bank reserves, a critical indicator of the banking sector’s health and the economy’s liquidity, also decreased slightly from N17.53tn to N19.51tn in March.

An economist at Lotus Beta Analytics, Shadrach Israel, said that the implications of these changes are multifaceted. An increase in NFA can bolster the country’s foreign exchange reserves, providing a cushion against external shocks and enhancing the CBN’s ability to manage the exchange rate.

However, the decrease in domestic assets and credit may signal tighter financial conditions, potentially impacting borrowing costs and economic growth.

Israel said the increase in the NFA is a positive outlook for the economy as the foreign assets had been depleted earlier.

“Our foreign assets were heavily depleted before now. This will restore positive confidence in the minds of investors. We should expect an increase in foreign direct investment,” he said. (punch)