Former Nigerian President Olusegun Obasanjo has stated that he boosted the country’s foreign reserves from $3.7 billion in 1999 to $45 billion at the end of his eight-year tenure in 2007.
Speaking in an interview with News Central, which aired on Thursday, Obasanjo disclosed that he inherited a heavy debt burden upon assuming office.
At the time, Nigeria owed $36 billion, with debt servicing costs amounting to $3.7 billion, while the foreign reserves stood at just $3.7 billion.
The former president explained that through persistent advocacy for debt relief from international creditors, the country’s debt dropped from $36 billion to $3.5 billion by the end of his administration.
Simultaneously, the nation’s reserves grew from $3.7 billion to $45 billion during the same period.
“When I came in 1999, I met $3.7 billion in reserve. And as I told you, we were spending $3.5 billion to service debt. That’s how we had. By the time I left eight years later, with debt relief.
“When I came in, we had a debt overhang of close to $36 billion. By the time I left, with the debt relief and clearing what we had to clear, the quantum of debt that I left was about $3.5 to $3.6 billion from over $3.6 billion or around $36 billion. At the same time, the reserve that was $3.7 billion went to $45 billion,” Obasanjo said.
The big question now is what has happened to the foreign reserves left behind by the former president under successive administrations in the past seventeen years?.
What Happened to Nigeria’s Foreign Reserves Under Yar’adua
In 2007, president Umaru Musa Yar’adua took over the reins of power from president Olusegun Obasanjo and as such directly inherited the $45billion worth of foreign reserves and an additional $22 billion in the Excess Crude Account left behind by the president Olusegun Obasanjo administration.
Dr. Oby Ezekwesili who served as education minister under the president Obasanjo alleged that, the succeeding administration did little to shore up Nigeria’s foreign reserves.
The Former World Bank Vice president in 2013 stated “..the squandering of the significant sum of $45 Billion in foreign reserve account and another $22Billion in the Excess Crude Account being direct savings from increased earnings from oil that the Obasanjo administration handed over to the successor government in 2007.
“One cannot but ask, what exactly does Nigeria seek to symbolize and convey with this level of brazen misappropriation of public resources? Where did all that money go? Where is the accountability for the use of both these resources plus the additional several billions of dollars realized from oil sale by the two administrations that have governed our nation in the last six years? How were these resources applied or more appropriately, misapplied?”. Former Kaduna state governor, Mallam Nasir El Rufai who served as the Minister of the FCT between 2003-2007 also reiterated the points put forward by Dr. Oby Ezekwesili.
However, at the end of Yaradua’s and Jonathan, his successor’s administration, the foreign reserves were said to have been depleted to almost nothing.
Checks revealed that at the peak of the oil prices in september, 2008 when oil prices were $147 per barrel, the foreign reserves under Yar’adua grew to $63 billion. However as at 2009 when then Vice-president Jonathan took over as ‘overseer’ due to Yar’adua’s medical condition, the foreign reserves had depleted to $47.7 billion.
Nigeria’s Foreign Reserves Under Jonathan
Jonathan’s administration was the administration mostly faulted for squandering Nigeria’s foreign reserves having taken over a foreign reserve of $47.7billion.
Critics have accused the Jonathan administration of using part of the money to execute the 2011 elections. Jonathan has particularly been accused of returning the country to debt with repeated borrowings. Goodluck Jonathan presided over a robust external reserve profile but left behind $28.5 billion in external reserves by the time he left office in May 2015 with an additional $2.07 billion in the Excess Crude Account.
However, Dr. Ngozi Okonjo Iweala, Minister of Finance under president Jonathan debunked these claims stating;
“It is absolutely not true that the Administration of President Goodluck Jonathan has squandered the nation’s reserves.
She maintained that “at the end of May 2007, Nigeria’s gross reserves stood at $43.13 billion – comprising the CBN’s external reserves of $31.5 billion, $9.43 billion in the Excess Crude Account, and $2.18 billion in Federal Government’s savings.
“These figures can be independently verified from the CBN’s records”. She further insisted that “the figure of $67 billion cited by the obasanjo administration was factually incorrect”.
Allegations of Widespread Corruption Under Jonathan
The drop in Nigeria’s foreign reserves under Jonathan was not only caused by plummeting global oil prices and a forex policy of defending the naira with reserves but also by reckless spending by top government officials.
As at 2016, one year after the end of his administration; at least 25 persons who served as ministers, aides or advisers to President Goodluck Jonathan were being either investigated or prosecuted by the Economic and Financial Crimes Commission and the Independent Corrupt Practices and Other Related Offences Commission on different charges ranging from the $15bn arms scam to the alleged disbursement of N23bn stolen oil funds and other allegations of financial impropriety..
Apart from ministers and aides, Jonathan’s wife, Patience, and his cousin, Azibaola Robert, who is the Managing Director of OnePlus Holdings, were also under probe for an alleged $20m and $40m fraud respectively with over 15 heads of agencies and heads of military establishments who served under Jonathan are also under probe or prosecution.
Among the key prosecutions were former Minister of Petroleum Resources, Diezani Alison-Madueke, whose accounts were frozen with some of her properties, including a mansion worth N3.58bn in Abuja, seized by the EFCC following allegations of diverting $115m (N23bn) oil cash and distributing it to some prominent members of the Peoples Democratic Party during the build-up to the 2015 presidential election amongst others.
former National Security Adviser, Col. Sambo Dasuki (retd.), was also alleged to have disbursed about $2.1bn of arms money illegally including allegedly transferring about N4.7bn to a former Minister of State for Defence, Musiliu Obanikoro; who was also under EFCC investigation.
Foreign Reserves Under Buhari
President Buhari met an external reserve of $29.4 billion when he became president on May 29th, 2015. At the time, the country faced a foreign exchange crisis with reserves having depleted by a whopping $4.8 billion year to date.
Under president Buhari, The central bank also introduced an incentivized interest rate policy that offered high-interest rates in exchange for importing dollars into the country. This policy helped swell the external reserves to as high as $47 billion in 2019, the highest level since 2013. data from the CBN revealed that by the time Buhari left office in 2023, Nigeria’s foreign reserves stood at $35.15 billion.
However, further checks revealed the CBN’s reckless and illegal advances to the Muhammadu Buhari administration via ‘Ways and Means’ that reached N22.7 trillion, and to ‘defend’ the naira at the foreign exchange market caused a slump of the country’s foreign reserves to $3.7 billion . this created a huge controversy that made Tinubu suspended Godwin Emefiele as CBN Governor, and since then, he has been detained by the Department of State Services and arraigned in court.
How Significant is Nigeria’s Foreign reserves?
As at September 2024, Nigeria’s foreign reserves stood at $39.07 billion. The external reserve of a country is a measure of how strong an economy is, especially from the point of view of foreign currency stability, being able to pay for imports and defend its currency.
Low foreign reserves constrain the ability of the CBN to intervene to moderate rates as the gap between the official rate and the parallel markets continue to widen, erasing a major goal of economic reforms this is in addition to the effect of depleting reserves on servicing debt obligations.
Nigeria’s foreign reserves has constantly dipped over the years, adding even more pressure on the Naira. Nigerians would continue to imagine what could have happened if President Obasanjo’s foreign reserve growth had been sustained in the past seventeen years.
