Nigeria’s economic reform agenda is gaining fresh traction as foreign exchange inflows rise significantly, signaling renewed investor confidence and stronger macroeconomic fundamentals. The country’s external reserves surged to $38.33bn as of June 4, 2025, marking an 18.7% increase from $32.29bn recorded in April 2024. The increase points to intensified foreign portfolio investments and a positive shift in international sentiment toward Nigeria’s economic direction.
The turnaround comes nearly two years after the Central Bank of Nigeria (CBN) embarked on a series of bold monetary and structural reforms aimed at stabilising the macroeconomic environment. These include unifying the foreign exchange market, clearing FX backlogs, aggressively tightening monetary policy, and reducing quasi-fiscal interventions that had previously undermined investor trust.
CBN Governor Olayemi Cardoso, in a recent address, noted that his administration’s top priority has been rebuilding Nigeria’s economic buffers and restoring confidence in monetary policy. “We are committed to taking evidence-based decisions that serve the interest of Nigerians. Every action we take is aimed at ensuring long-term macroeconomic stability,” he said.
One of the most tangible results of these reforms has been the surge in foreign portfolio investments, which rose to $3.48bn in the first half of 2024, up sharply from $756.1m over the same period in 2023. This growth is largely credited to improved policy clarity, the liberalisation of the FX market, and aggressive interest rate hikes, which have made Nigerian assets more attractive to international investors.
To anchor inflation expectations, the CBN raised the Monetary Policy Rate by 875 basis points to 27.5% in 2024 alone. While inflation remains elevated at 34.8% as of December, the aggressive monetary stance and relative naira stability have boosted investor confidence. Analysts anticipate continued high yields in Nigeria’s fixed-income markets will sustain foreign capital inflows throughout 2025.
Further boosting investor sentiment is Nigeria’s successful return to the Eurobond market after a two-year hiatus. In November 2024, the country raised $2.2bn in dual-tranche bonds, drawing over $9bn in subscription offers. The overwhelming demand reflects global confidence in Nigeria’s fiscal consolidation efforts and capacity to manage external debt obligations.
Despite these achievements, the road ahead is complex. Fiscal sustainability remains a challenge, with oil prices falling below $65 per barrel—well below Nigeria’s budget breakeven point. The Wall Street Journal projects a further decline to $50 per barrel by end-2025, raising concerns about government revenue shortfalls and widening fiscal deficits.
In response, the CBN is pushing for structural diversification. The apex bank has launched initiatives to promote backward integration in key sectors such as telecommunications, agriculture, and manufacturing. Governor Cardoso recently urged telecom giants like Airtel Africa to localise the production of inputs such as SIM cards and transmission equipment to cut import costs and reduce pressure on the naira.
Airtel Africa’s Group CEO, Sunil Taldar, lauded the central bank’s direction and pledged support for the initiative, stating that local production would not only reduce FX demand but also create jobs and boost the domestic economy.
Analysts at Commercio Partners, including macro strategist Ifeanyi Ubah, believe Nigeria’s resilience hinges on maintaining reform momentum and guarding against global shocks such as a hawkish U.S. Federal Reserve. In its recent report, Nigeria’s Eurobond Outlook: Resilience Amid Global Uncertainty, the firm noted that sustained reforms, improving reserves, and better fiscal management offer a solid base for long-term growth.
However, global conditions could still weigh on Nigeria’s recovery. Tight U.S. monetary policy may suppress appetite for emerging market assets, including Nigerian Eurobonds, while persistent domestic security challenges in oil-producing regions continue to hamper crude production, projected at 1.4 million barrels per day—well below pre-pandemic levels.
The World Bank has praised the government’s macroeconomic reforms but emphasised the need for inclusive growth strategies. Its lead economist for Nigeria, Alex Sienaert, recommended scaling up cash transfer programs to protect the most vulnerable and called for a greater role for the private sector in job creation and innovation.
Sienaert said, “Nigeria needs to grow at five times its current rate to reach a $1 trillion economy by 2030. The public sector must play a dual role—providing essential services and enabling private sector expansion.”
Looking ahead, the Nigerian government has set an ambitious growth target of 7% per annum to drive poverty reduction and economic transformation. Although the World Bank projects a more conservative 3.6% growth in 2025, the momentum generated by recent foreign exchange reforms and fiscal prudence offers a promising foundation.
Still, challenges such as inflation control, revenue diversification, and FX market transparency must be consistently addressed to sustain the reform gains and attract long-term investment.