21 February 2010

Africa: Foreign Reserves Drops to $41 Billion - AFDB Forecasts Seven Percent GDP for Africa

Nigeria lost about $238 million from its foreign reserves in a day.From $42.2 billion on February 17, the reserves went down to $41.9 billion on February 18.

No official comment as to the reduction on the reserves which was pasted on the website of the Central Bank of Nigeria (CBN) yesterday.

Reserves are meant to showcase the country's credit worthiness in the international market as well as to facilitate easy credit facilities for the local importers.

Unofficial explanation by a top CBN officer linked the drop to more outflow than inflow into the reserves. By outflow he meant money going out and inflow money coming in.

The foreign reserves peaked at $64 billion in August 2008, when the prices of crude oil at the international market also peaked at $147 per barrel. Crude oil is now sold for $77 per barrel.

The drop in the reserves was coming a week after the Acting President GoodLuck Jonathan ordered the sharing of $2 billion from the Excess Crude Account by the State Governors, leaving it with a balance of $4.2 billion.

The account which is kept for the raining day peaked at $20 billion in January 2009.

Meanwhile, the African Development Bank (AfDB) said yesterday that Africa's real Gross Domestic Product (GDP) could grow to about 7 percent in 2011 from a forecast of about 5.5 percent growth for 2010.

AfDB President Donald Kaberuka said this at the Bank's Committee of 10 (C10) meeting in Cape Town, according to Reuters.

"When we look at this year 2010, I totally concur with the numbers from the International Monetary Fund... (of) around 5.5 percent of real GDP growth and going into 2011, perhaps 1.5 percent more", Kaberuka said.

The C10, consisting of African finance ministers and central bank governors, was formed to develop an African response to the global financial crisis after a meeting in November 2008.

AfDB Vice President of Infrastructure and Regional Integration Bobby Pittman said the Bank could finance infrastructure projects worth up to $10 billion over the next three years in Africa, with a focus on the energy sector.

"We are estimating our pipeline of deals that we could finance within the next three years at $7 to $10 billion, and that's a conservative figure," Bobby Pittman told Reuters.

Last year, AfDB approved approximately $15 million through its African Development Fund to the African University of Science and Technology (AUST), Abuja and the International Institute for Water and Environmental Engineering to promote and enhance linkages among African Science and Technology institutions.

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