Foreign reserves: Economist urges diversification of economy

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An economist, Dr Tunde Adeoye, has advised the Federal Government to intensify efforts in diversifying the economy, to sustain the increase in the Foreign Reserves.

Adeoye, a Senior Lecturer, Department of Economics, University of Lagos, gave the advice in Ota, Ogun State. According to him, the nation heavily depends on generating its foreign reserves from the sales of crude oil.

The Governor of CBN, Mr Godwin Emefiele, had on Monday in Abuja, said that the nation’s external reserves increased from 38 billion dollars in December, 2017 to 40.4 billion dollars  in January, 2018.

He noted that the reason for the increase was the rise in the prices of crude oil at the international market. The don said the development made the external reserves to pick from its initial position.

Adeoye, however, said there was the urgent need to fully diversify the economy, to reduce the dependence on oil. He also added that both the price and quantity of daily oil sales were not within control because it was determined by a cartel.

“It is driven by external forces. Any decrease in the price of the oil at the International market would drastically affect the nation adversely because it is driven by external forces.”

Adeoye said until the Federal Government diversified the economy away from oil, the external reserves would be difficult to sustain.