1. Ok let me explain Foreign Reserves to you in layman’s terms (and I welcome any expert or CBN to challenge this)
Got this inspiration from Tosin Adeoti.
You probably have heard Buhari looking to borrow $3bn for God knows what.
Got this inspiration from Tosin Adeoti.
You probably have heard Buhari looking to borrow $3bn for God knows what.
2. And you’ve heard that Nigeria’s foreign reserves is circa $40bn
Why is Buhari not taking from the reserves. Why is he putting us in debt abi?
Well those foreign reserves are not really reserves 😂
Why is Buhari not taking from the reserves. Why is he putting us in debt abi?
Well those foreign reserves are not really reserves 😂
3. Abi if you reserve money, it means that it is yours for the rainy day, night right?
Well not in this case.
Nigeria sell goods to the world majorly oil and collects dollars in return.
Well not in this case.
Nigeria sell goods to the world majorly oil and collects dollars in return.
4. Dollar is the global currency. The standard unit of money as at today. So almost all countries change their currencies to dollars and pay for what’s bought.
After we take their dollars after giving them oil, FG meets CBN, oya help me change this dollar to naira.
After we take their dollars after giving them oil, FG meets CBN, oya help me change this dollar to naira.
5. Why?
FG can’t spend revenue in $ in Nigeria. They must pay contractors, workers salaries (and other obligations) in guess what? Naira.
Why do they meet CBN? Because only CBN is authorized to print Naira.
FG can’t spend revenue in $ in Nigeria. They must pay contractors, workers salaries (and other obligations) in guess what? Naira.
Why do they meet CBN? Because only CBN is authorized to print Naira.
6. So CBN takes the dollar and gives Naira to FG to do whatever.
FG flexes and enjoys the Naira, CBN keeps the dollars.
Now that dollars that FG gave CBN is what we know as FOREIGN RESERVES.
FG flexes and enjoys the Naira, CBN keeps the dollars.
Now that dollars that FG gave CBN is what we know as FOREIGN RESERVES.
7. From all I’ve said above, that dollar no longer belongs to FG.
Almost like meeting one “aboki” to change N500k to $1k, then you go home and enjoy your N500k then boast to your wife that you have reserves of $1k somewhere. 😂😂.
Weyrey!
Almost like meeting one “aboki” to change N500k to $1k, then you go home and enjoy your N500k then boast to your wife that you have reserves of $1k somewhere. 😂😂.
Weyrey!
8. It’s not over.
What’s the use of that dollar that FG gave CBN.
CBN uses that dollars to give anyone who needs to buy things from abroad
What’s the use of that dollar that FG gave CBN.
CBN uses that dollars to give anyone who needs to buy things from abroad
9. Dangote wants to buy stuff from abroad, he meets CBN and give them Naira in exchange for dollars and he pays his suppliers abroad.
You want to use your bank Naira card to buy stuff abroad, your bank changes Naira in your account to dollars with CBN and pays for it
You want to use your bank Naira card to buy stuff abroad, your bank changes Naira in your account to dollars with CBN and pays for it
10. CBN can’t spend the dollars with it. They can only exchange for Naira so imports happen.
It is reserved for making foreign payments.
It is reserved for making foreign payments.
11. Foreign reserves also determines what we can import as a country.
If Nigerians spend $10bn per month on imports and CBN has just $30bn in reserves, we will survive for just 3 months till....
This is also why we must look at exports. Get those dollars flowing in!
END!
If Nigerians spend $10bn per month on imports and CBN has just $30bn in reserves, we will survive for just 3 months till....
This is also why we must look at exports. Get those dollars flowing in!
END!
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