Post misleadingly claims Nigeria’s foreign exchange reserves rose under former president Yar’Adua

The removal of both Nigeria’s subsidy on petrol and its currency peg by President Bola Tinubu has continued to elicit reactions on social media, including a post that claimed the country’s former leader Musa Yar’Adua managed to increase the nation’s foreign exchange reserves while financing a government fuel subsidy. But this is misleading: Nigeria’s foreign exchange reserves under Yar’Adua rose and then fell, ending about US$3 billion less over his term in office.

“Yaradua paid subsidies, petrol price’s reduced and he still increased reserves. Let’s ask how did it do it (sic),” reads a message posted on August 3, 2023, on Twitter, which is being rebranded as ‘X’.

The message, published by an account that belongs to a TV host on Arise TV, a local television station, has been reposted more than 3,600 times.

A screenshot showing the misleading post, taken on August 6, 2023

Tinubu announced the removal of a government subsidy on petrol during his inaugural speech on May 29, 2023 (archived here), arguing Nigeria could no longer afford to prop up the fuel price. The naira also took a battering when the central bank subsequently removed the country’s currency peg, as Tinubu had directed (archived here).

About 90 percent of Nigeria’s foreign exchange earnings (archived here) come from crude oil sales.

Nigeria’s government introduced subsidies on fuel in the 1970s and the policy was formalised in 1977 following the promulgation of the Price Control Act which made it illegal for some products, including petrol, to be sold above the regulated price.

Successive governments, including the Yar’Adua administration, continued to make provision for the subsidies in the annual budget.

Yar’Adua was president from May 29, 2007, to May 5, 2010, when he died in office.

The claim that he boosted Nigeria’s currency reserves, however, is misleading.

Nigeria’s FX reserve

Foreign exchange reserves are assets held by a central bank in foreign currencies. These reserves are used to back liabilities and influence monetary policy.

It is true that Nigeria’s foreign exchange reserves initially climbed during Yar’Adua’s time in office, before falling to lower levels.

An economic report by Nigeria’s central bank shows (archived here) that the country’s reserves around the time Yar’Adua was sworn in as president on May 29, 2007, amounted to US$ 43.53 billion.

A screenshot showing Nigeria’s reserves in April 2007, taken on August 6, 2023

By the end of the year, the figure had climbed to US$ 51.3 billion, reaching US$ 53 billion in 2008, according to another report by the central bank.

But, owing to the crash in the international price of crude oil in 2008 and the aftermath of the global financial crisis, Nigeria’s reserves fell to $42.4 billion in 2009.

By April 2010, a month before Yar’Adua died, reserves had shrunk (archived here) to US$ 40.31 billion – about US$ 3 billion less than when he took office.