$4.5 Billion Unaccounted For in Nigeria’s Foreign Reserves, Audit Reveals

Discovery of Financial Discrepancy

An investigation by the Office of the Auditor-General of the Federation (OAuGF) has brought to light a concerning gap in Nigeria’s Foreign Reserves, with $4.5 billion missing between the years 2018 and 2019. This revelation came from the annual audit report, which assesses the financial transactions of the government’s various departments and agencies.

The Details of the Discrepancy

The audit detailed that Nigeria’s Foreign Reserves decreased from US$42,594,842,852.75 at the end of December 2018 to US$38,092,720,200.72 by the end of 2019. This leaves a significant sum of US$4,502,122,652.03 unexplained.

Underlying Concerns

The occurrence of this financial irregularity coincided with the tenure of Godwin Emefiele as the governor of the Central Bank of Nigeria (CBN), who is currently facing allegations of corruption. Auditor-General Shaakaa Chira has called upon the CBN for an explanation regarding the missing funds, highlighting concerns over the bank’s compliance with its statutory responsibilities, including the maintenance of a stable exchange rate as per the Central Bank of Nigeria Act, 2007.

Further Financial Irregularities

Additional Unexplained Declines

Beyond the initial findings, the audit report also uncovered an “unsubstantiated” decline of over $8 billion in foreign reserves between 2019 and 2020, with total reserves plummeting to $35.7 billion from $44.7 billion within a year. The report attributes these discrepancies to weaknesses in the CBN’s internal control systems and economic management strategies.

Issues with Recovered Funds

The CBN’s failure to account for the total funds recovered by the Economic and Financial Crimes Commission (EFCC) from 2016 to 2019 was another concern raised in the report, highlighting a violation of the EFCC Act, 2004 which mandates that such recoveries should be deposited into the Consolidated Revenue Fund of the Federation.

CBN’s Response to the Audit

Efforts to Enhance Foreign Reserves

In response to the audit findings, the CBN outlined its efforts to increase the foreign reserves, mentioning initiatives like the Presidential Artisanal Gold Mining Initiative (PAGMI) and significant interventions in the agricultural sector aimed at boosting exports and reducing pressure on the reserves.

Expert Opinions on the Implications

Impact on Credibility and Economy

Experts such as Lukman Rahim, an Associate Chartered Accountant, and Emmanuel Yoko, Director at the Nigerian College of Accountancy, expressed concerns over the repercussions of the CBN’s inability to account for the missing funds. They noted the potential erosion of public and investor trust, the adverse impact on economic growth, and the direct effects on citizens’ cost of living and the government’s capacity to fund crucial public sectors.

The audit report’s findings underscore the necessity for transparency and robust financial management within Nigeria’s central banking system to foster economic stability and regain public confidence.