Nigeria’s Current Account is projected to record a significant surplus of $6.96 billion within the next 12 months, according to a recent macroeconomic report by the Central Bank of Nigeria (CBN). This forecast represents an increase from the $5.31 billion surplus recorded last year.
The CBN’s report highlights several factors contributing to the expected rise in Nigeria’s Current Account surplus. The primary drivers include a robust trade surplus, increased diaspora remittances, and improvements in the oil and gas sector.
“The expected increase in the Current Account surplus is driven by a combination of factors,” said the CBN report. “Sustained trade surpluses, particularly from strong export performance, and rising remittances from Nigerians abroad are central to this positive outlook.”
One of the main contributors to the projected surplus is Nigeria’s export performance. The report forecasts that total exports will rise to $55.21 billion in 2024, up from $54.53 billion in 2023. This growth is attributed to increased production of crude oil, improved security of oil installations, and the operational impact of the Dangote Refinery.
“The Dangote Refinery, which is set to begin operations soon, is expected to increase Nigeria’s export receipts and reduce the need for petroleum product imports,” the CBN stated. “This will significantly impact our trade balance positively.”
Additionally, ongoing geopolitical tensions and supply cuts by OPEC+ are likely to boost Nigeria’s oil export earnings. The CBN anticipates a rise in domestic oil production and a potential increase in global oil prices, further enhancing Nigeria’s export revenues.
The CBN report also outlines anticipated changes in import and export dynamics. Imports are expected to decrease to $46.11 billion in 2024, down from $49.68 billion in 2023. This reduction is attributed to a decrease in oil imports due to the operations of the Dangote and Port Harcourt refineries.
“The implementation of the Petroleum Industry Act 2021 and refinery operations are expected to reduce our oil imports,” the report explained. “However, there may be a slight increase in non-oil imports due to improved global and domestic economic conditions.”
On the non-oil front, the CBN predicts higher export receipts from key commodities such as urea, fertilizer, sesame seeds, cocoa beans, hibiscus flowers, and cashew nuts. Government initiatives like the “Export 774” Programme are also expected to support the diversification of Nigeria’s export base.
While the Current Account is projected to show a surplus, other areas present mixed outcomes. The services account deficit is expected to narrow slightly to $12.85 billion from $12.92 billion. This slight improvement is attributed to reduced spending on business, transportation, and travel services, influenced by higher costs and a weaker naira.
Conversely, the primary income account deficit is projected to widen to $9.36 billion from $8.46 billion. This increase is anticipated due to higher repatriation returns on investments by foreign investors.
The report also projects a modest increase in diaspora remittances, rising to $19.42 billion from $19.17 billion in 2023. This increase is expected due to improved global economic conditions and reforms in the foreign exchange market that facilitate better remittance processes.
“Efforts to enhance efficiency and transparency in the foreign exchange market are likely to boost remittances through formal channels,” the CBN noted. “The reforms are aimed at allowing International Money Transfer Operators (IMTOs) to pay beneficiaries at market-determined exchange rates.”
In terms of financial accounts, the CBN expects a higher net borrowing position of $6.41 billion compared to $6.39 billion in 2023. This projection is based on anticipated increases in external borrowings through euro bonds and multilateral loans, alongside higher portfolio inflows.
“The increase in financial liabilities is attributed to expected external borrowings and rising investments abroad by residents,” the report explained. “This will lead to an overall rise in financial assets.”
