Nigeria’s external sector came under significant strain in 2025, as fresh data revealed that Nigeria’s Balance of Payment falls 38% to $4.23 billion, reflecting a sharp deterioration in the country’s trade and investment position.
Provisional statistics released by the Central Bank of Nigeria (CBN) show that the Balance of Payments (BOP) surplus dropped from $6.83 billion in 2024 to $4.23 billion in 2025, underscoring the combined impact of declining oil revenues, weakening foreign portfolio inflows, and rising external obligations.
The BOP, which measures all economic transactions between Nigeria and the rest of the world, is a key indicator of the country’s external financial health. The latest figures highlight a complex mix of vulnerabilities and emerging strengths within the economy.
Nigeria’s Balance of Payment falls 38% despite gains in gas, refining exports
A major driver behind the decline was the contraction in crude oil export earnings. Oil exports fell by 14.4 per cent to $31.54 billion in 2025, down from $36.85 billion in the previous year. This drop significantly weakened Nigeria’s current account position, given the country’s heavy reliance on crude oil as its primary foreign exchange earner.
However, the data also revealed some positive developments. Gas exports rose sharply by 21.4 per cent to $10.51 billion, providing partial relief to the external sector. In addition, the emergence of the Dangote Refinery as a major exporter of refined petroleum products contributed to improved trade dynamics.
Refined petroleum exports from the refinery were valued at $6.13 billion, helping to reduce Nigeria’s fuel import bill by 28.9 per cent—from $14.06 billion in 2024 to $10.00 billion in 2025. This shift supported the goods account, which posted a stronger surplus of $14.51 billion.
Despite these gains, they were insufficient to offset the broader pressures dragging down the BOP.
Current account surplus shrinks amid rising imports, service payments
Further analysis showed that Nigeria’s current account surplus declined by 26.2 per cent to $14.04 billion in 2025, compared to $19.03 billion recorded in 2024.
The reduction was driven by multiple factors, including increased non-oil imports, higher service-related outflows, and payments linked to foreign investments.
Non-oil imports rose by 13.6 per cent to $29.24 billion, reflecting sustained demand for foreign goods and industrial inputs. At the same time, the services account deficit widened to $14.58 billion, largely due to higher spending on transportation, travel, and insurance services.
More significantly, net outflows in the primary income account surged by 60.9 per cent to $9.09 billion. According to the CBN, this increase was largely due to higher dividend and interest payments to foreign investors, particularly those holding equity and debt instruments in Nigeria.
Foreign investment flows show mixed performance
The financial account recorded a dramatic reversal during the year, shifting from a net lending position of $9.65 billion in 2024 to a net borrowing position of $1.69 billion in 2025.
This reversal was largely driven by a sharp decline in foreign portfolio investment (FPI), which dropped by 48.3 per cent to $8.04 billion, down from $15.55 billion in the previous year. The decline reflects reduced investor confidence in short-term financial instruments, often influenced by global economic uncertainty and domestic macroeconomic risks.
In contrast, foreign direct investment (FDI) recorded strong growth, rising by 149.1 per cent to $4.01 billion from $1.61 billion in 2024. This suggests that long-term investors remain cautiously optimistic about Nigeria’s economic prospects, particularly in sectors such as manufacturing, energy, and infrastructure.
External reserves provide buffer amid economic strain
Despite the overall decline in the BOP surplus, Nigeria’s external reserves recorded a notable increase. Reserves rose by 13.8 per cent to $45.75 billion at the end of 2025, providing a critical cushion against external shocks.
The growth in reserves is expected to support exchange rate stability and enhance the country’s ability to meet international obligations, even as pressures persist in the external sector.
Structural challenges persist
The fact that Nigeria’s Balance of Payment falls 38% highlights underlying structural challenges within the economy. Heavy dependence on crude oil exports, vulnerability to global market fluctuations, and persistent import reliance continue to expose the country to external shocks.
At the same time, rising service payments and profit repatriation by foreign investors are placing additional pressure on Nigeria’s foreign exchange earnings.
Economic analysts stress the need for sustained diversification, improved export competitiveness, and stronger policies to attract stable, long-term capital inflows.
Outlook for 2026
Looking ahead, Nigeria’s external sector outlook will largely depend on global oil price trends, domestic production levels, and the ability to sustain gains in non-oil exports.
While the rise in gas exports and refined petroleum products signals progress, the broader economic framework will need to address structural inefficiencies to ensure long-term stability.
As it stands, the reality that Nigeria’s Balance of Payment falls 38% serves as a critical signal for policymakers to accelerate reforms aimed at strengthening the country’s external position and reducing vulnerability to global economic shocks.