The Central Bank of Nigeria has said that Nigerians abroad remitted $8bn to the nation’s economy between January and June 2007.

The Deputy Governor, Operations, Central Bank of Nigeria, Dr. Shamsudeen Usman made the disclosure on Tuesday in Abuja.

Previously, remittances were in the neighborhood of $4bn yearly, according to CBN figures.

Answering questions on the floor of the senate, during the ministerial screening, Usman said foreign capital inflows also amounted to $7bn in 2006.

He said, “We all know the funds that have been accumulated through the pension funds. We are talking of about N600bn.

“These are all the sources of funds that will provide long-term funding to finance the kind of projects that have the potential of regenerating the economy.”

Usman also said that as at Monday, foreign reserves stood at $43.6bn. He said that out of this, only about $8.8bn was available for spending.

According to him, “If you break down this money, about $31bn or 71 per cent of it belongs to the CBN. We are like a bureau de change. The money was earned by the federation; they brought the dollars to the CBN; we took the dollars and gave them naira and they have spent the money.

“All the three tiers of government have shared this $31bn and spent it. It is like going to the bureau de change, they give you naira, you go and spend it and then you go back and look at the dollar you gave to the man and say that there is money there.”

He said $31.3bn of this money was not available for spending and that $2.3bn out of that belonged to the Federal Government.

He added, “The only amount available in the federation account for distribution, which is the “so-called” excess crude, was as at yesterday (Monday) about $9.9bn. And there are some transactions that are in the pipeline of about $1bn. Net, we are talking of about $8.8bn. So, if there is any amount to be looked at, it is that amount. If we are to translate that amount into naira, it comes to about N1.1tn.”

The Deputy Governor, however, advised that spending this kind of money at such a short notice within the economy would create “a cloud of inflation.”

On the issue of high interest rates, he said interest rates could not be brought down by fiat.

He argued that even in the days of a controlled economy, it was almost impossible to enforce strict compliance.

According to him, banks introduce different types of charges to keep interest rates in the region they want.

He said, “They will put all sorts of charges such that if we say 21 per cent, you end up with about 30 per cent. The answer again is, let us continue with the reforms we are doing. Look at what is happening in the banking sector today. We are moving from a regime of over 30 per cent down to about 20 per cent. Now, some very good customers can actually borrow at the rate of between 15 per cent and 18 per cent.

“With the inflow of funds into the system and with the level of funds that banks are raising, we believe that it is a matter of time. Every bank or the other is in the market to raise money. When they raise this money, because they have to utilise it, interest rates will have to come down.”

In reaction to a question raised on the continuous movement of people from the rural to the urban areas, Usman said Nigerians had to concentrate on growing the economy.

“We are so much concerned with the issue of sharing the cake in Nigeria; we are not making any effort to bake the cake and growing it bigger. Look at all the countries that are doing extremely well today, Brazil, India and China among others, if we can grow the Nigerian economy by 10 per cent and above, continuously, we will be able to double the size of the economy in seven to eight years,” he said.

He explained that if this could be done in those seven to eight years, the country would be able to nearly halve the number of people living below the poverty line.

According to him, employment will also be generated, especially if this growth is more private-sector led.

He said, “So, the answer really is that we must continue with these policies. So much has been achieved in recent times. The economy has been growing at close to six per cent. We need to take it to a higher level. But of course, in the interim, there are certain palliatives that we can provide. The problem with economic policies, generally, is that there are always gainers and losers.

“In any economic policy, some people will gain, others will lose. If you go to a community that does not have water supply and provide water, people who are selling water, will, immediately, lose their source of income. But the important thing is that for the whole of the community, everybody is better off.

Usman also expressed confidence that the capital market would stem the unethical practice of using young Nigerian ladies as baits to get deposits.

The capital market had exhibited the potential of providing more funds than most banks could handle, he said.