Nigeria has made significant progress in its economic recovery, posting a Balance of Payments (BOP) surplus of $6.83 billion for the 2024 financial year. This marks a remarkable turnaround from the deficits of $3.34 billion in 2023 and $3.32 billion in 2022, signaling the success of the country’s macroeconomic reforms, stronger trade performance, and renewed investor confidence.
The Central Bank of Nigeria (CBN) announced the surplus in a statement that highlighted key improvements in the country’s external financial position. The surplus is attributed to positive shifts in trade performance, reduced imports, and a notable increase in export earnings, especially from the oil and gas sector.
One of the key factors driving Nigeria’s BOP surplus is the performance of the current and capital accounts, which recorded a combined surplus of $17.22 billion in 2024. This strong performance was underpinned by a goods trade surplus of $13.17 billion, indicating that Nigeria’s exports exceeded its imports by a significant margin.
The country saw a 23.2% decline in petroleum imports, which dropped to $14.06 billion, contributing to reduced outflows. Similarly, non-oil imports fell by 12.6%, reaching $25.74 billion. On the export side, Nigeria saw impressive growth in its oil and non-oil exports. Gas exports rose by 48.3%, reaching $8.66 billion, while non-oil exports grew by 24.6%, totaling $7.46 billion.
This positive trend in trade is a result of the government’s ongoing efforts to diversify Nigeria’s economy and reduce reliance on crude oil. The increase in non-oil exports, which include agricultural products and manufactured goods, indicates that Nigeria’s broader export base is gaining traction in international markets.
Remittances, a crucial source of foreign exchange for Nigeria, also showed strong growth in 2024. Personal remittances rose by 8.9%, amounting to $20.93 billion. International Money Transfer Operator (IMTO) inflows, which represent the formal remittance channels, surged by 43.5% to $4.73 billion, up from $3.30 billion in 2023. This increase reflects the stronger engagement of the Nigerian diaspora, which has been a major source of support for families back home and a key contributor to the country’s foreign exchange inflows.
In addition, official development assistance (ODA) to Nigeria increased by 6.2%, reaching $3.37 billion. This funding is crucial for supporting development projects, particularly in sectors such as healthcare, education, and infrastructure.
Nigeria also saw significant improvements in its financial account, which recorded a net acquisition of financial assets totaling $12.12 billion. Portfolio investment inflows more than doubled, increasing by 106.5% to $13.35 billion, signaling strong investor confidence in the country’s economic recovery. This surge in portfolio investments highlights the positive impact of Nigeria’s ongoing macroeconomic reforms, which have made the country more attractive to foreign investors.
However, foreign direct investment (FDI) showed a decline of 42.3%, falling to $1.08 billion. Despite this drop, the overall financial account posted notable gains, with portfolio investments compensating for the decline in FDI. This suggests that while Nigeria is still working to attract more direct foreign investments, it remains an attractive destination for portfolio investors.
In another sign of growing confidence in the Nigerian economy, resident foreign currency holdings increased by $5.41 billion. This reflects the stability that investors and residents feel in holding assets in the local currency, the Naira, as a result of the country’s improved economic outlook.
A key achievement for Nigeria in 2024 was the increase in its external reserves, which rose by $6.0 billion to reach $40.19 billion by the end of the year. This increase in reserves provides a strong external buffer for the country, improving its ability to weather external shocks, such as fluctuations in global oil prices or global economic uncertainties.
The reserves boost also comes at a crucial time, as it helps to further stabilize the Naira and supports the Central Bank’s efforts to manage inflation and maintain macroeconomic stability. A strong reserve position is essential for maintaining investor confidence and ensuring that Nigeria can meet its external obligations, including paying for imports and servicing foreign debt.
One of the most encouraging developments in Nigeria’s external finances in 2024 was the substantial reduction in net errors and omissions. The country’s net errors and omissions narrowed by 79.5%, falling to negative $5.10 billion from $24.90 billion in 2023. This dramatic improvement is a reflection of the increased accuracy and transparency in Nigeria’s economic data.
The reduction in errors and omissions is an important development, as it signifies that Nigeria’s data reporting and financial management systems have improved, contributing to greater confidence in the country’s financial reporting. This is crucial for attracting investment and ensuring that Nigeria’s macroeconomic policies are based on accurate and reliable data.
The positive turnaround in Nigeria’s external finances is seen as a direct result of the country’s ongoing reform agenda. Key reforms, such as the liberalization and unification of the foreign exchange market, have helped stabilize the Naira and reduce the demand for foreign currencies. These reforms have made Nigeria’s economy more competitive and improved investor sentiment.
Additionally, the Central Bank’s disciplined monetary policy approach, aimed at managing inflation and stabilizing the Naira, has contributed to the overall positive performance. The coordination between fiscal and monetary policies has also been instrumental in creating a more stable economic environment, making Nigeria a more attractive place to do business.
The successful implementation of these reforms has helped Nigeria turn a corner in its economic recovery, positioning the country for future growth and stability. As a result, Nigeria’s economic outlook is increasingly optimistic, with positive signs in key areas such as trade, investment, and remittances.
The Central Bank Governor, in a statement, expressed satisfaction with the BOP surplus, stating that it marked a significant step forward for the Nigerian economy. “The positive turnaround in our external finances is evidence of effective policy implementation and our unwavering commitment to macroeconomic stability,” the governor said. “This surplus is a reflection of Nigeria’s continued resilience and the benefits of our comprehensive reform agenda.”
He added that the BOP surplus would have positive implications for businesses, investors, and everyday Nigerians. With strengthened reserves, improved trade performance, and more investor confidence, Nigeria is better positioned to navigate the challenges of the global economy and create a more prosperous future.
