Amid dwindling oil revenues and persistent external reserve pressures, Nigeria’s Central Bank (CBN) has rolled out a series of economic reforms aimed at stabilising the foreign exchange (FX) market and reducing reliance on imported goods. These policy measures, spearheaded by CBN Governor Olayemi Cardoso, are beginning to yield results, with foreign reserves showing signs of recovery even as global oil prices dip sharply.
As of the end of April 2025, Nigeria’s external reserves had dropped to $37.9 billion—reflecting a 5.91% decline from $40.88 billion recorded at the start of the year. This sharp decline mirrors a broader contraction in global crude oil prices, which fell from $73.29 per barrel in January to $62.78 per barrel by the end of May—a 16.74% drop. The price plunge is largely attributed to OPEC+’s decision to increase oil production, despite weakened global demand and ongoing geopolitical tensions.
Nigeria, which relies on crude oil exports for over 90% of its foreign exchange earnings, finds itself vulnerable to such fluctuations. Daily production has oscillated between 1.4 million and 1.54 million barrels per day (mbpd) this year, further straining reserves. However, with strategic interventions by the apex bank, a gradual rebound is in motion—external reserves have inched upward from $37.93bn in mid-April to $38.46bn as of May 29.
To counteract the economic shock, the CBN has intensified efforts to diversify FX inflows. Central to this strategy is the promotion of backward integration—encouraging local production of previously imported goods—and a push for export-oriented growth, especially in non-oil sectors.
Governor Cardoso stressed the importance of tapping into Nigeria’s untapped economic potential, particularly in agriculture, manufacturing, and the burgeoning creative sector. “Nigeria’s creative industry alone holds the capacity to generate up to $25 billion annually through music, film, arts, and digital exports,” he said, urging businesses to leverage global digital platforms and international markets.
In a strategic pivot, the CBN is also urging telecom companies to localise the production of critical input components such as SIM cards and cables. Cardoso’s message was reiterated during a recent meeting with Airtel Africa’s leadership, where he highlighted that local production would ease pressure on FX reserves and boost job creation.
Sunil Taldar, CEO of Airtel Africa, welcomed the reform direction, reaffirming the company’s commitment to supporting local manufacturing and driving financial inclusion. The initiative aligns with broader calls from industry stakeholders, including Gbolahan Awonuga of the Association of Licensed Telecommunication Operators of Nigeria, for enhanced government infrastructure support—especially power—to make local manufacturing competitive.
Meanwhile, analysts note that the apex bank’s forex reforms have restored investor confidence. Foreign Portfolio Investment (FPI) inflows are on the rise, daily FX turnover has increased by 226%, and the Nigerian Autonomous Foreign Exchange Market is functioning more efficiently. As a result, reserves climbed from $32bn in May 2023 to over $40bn in early 2025—representing the country’s highest buffer in three years and covering eight months of imports.
The CBN has also intensified its engagement with the Nigerian diaspora, introducing new products like the Non-Resident Nigerian Ordinary and Investment Accounts to streamline remittances and attract diaspora investment. Monthly remittance inflows have nearly doubled, rising from an average of $300 million in 2023 to $600 million by August 2024.
Dr. Aminu Gwadabe, President of the Association of Bureaux De Change Operators of Nigeria, praised the CBN’s strategic shift. He emphasised that remittances are now a critical pillar of FX supply, complementing FDI and FPI inflows. “The CBN’s reforms have not only restored market stability but are fostering inclusive growth,” he said.
Western Union’s 2024 report further underlined the transformative role of remittances, citing the $90 billion sent to Africa from its diaspora in 2023 as equivalent to the GDP of some countries.
As Nigeria confronts a tough global economic climate, these multifaceted reforms—from FX market liberalisation to localisation and diaspora engagement—signal a proactive shift in economic governance. While challenges remain, especially in infrastructure and oil production volatility, the CBN’s roadmap offers a beacon of resilience in turbulent times.