By Musa Ibrahim
Nigeria’s external sector faced mounting pressures in 2025, with the country’s overall Balance of Payments (BOP) surplus dropping 38.1 percent to $4.23 billion, down from $6.83 billion in 2024.
Provisional data from the Central Bank of Nigeria (CBN) highlights a challenging economic environment, where falling crude oil revenues and a sharp decline in foreign portfolio investments offset gains from gas exports and refined petroleum output.
The Current Account surplus, which reflects trade in goods and services, contracted by 26.2 percent to $14.04 billion in 2025, compared with $19.03 billion in the previous year. Crude oil exports fell 14.4 percent to $31.54 billion, despite a 21.4 percent increase in gas exports, which rose to $10.51 billion.
The Goods Account, a subset of the current account, recorded a higher surplus of $14.51 billion, supported largely by the Dangote Refinery. The refinery contributed $6.13 billion in refined petroleum exports and helped reduce fuel imports by 28.9 percent, from $14.06 billion to $10 billion.
Financial flows, however, reflected divergent trends. Foreign Portfolio Investments (FPI) fell sharply by 48.3 percent to $8.04 billion, while Foreign Direct Investments (FDI) surged 149.1 percent to $4.01 billion, indicating that long-term investors remained confident in Nigeria’s economic potential despite short-term volatility.
The BOP was further pressured by rising deficits in the services and primary income accounts. Out-payments in the services account increased to $14.58 billion due to higher spending on transport, travel, and insurance. Net out-payments in the primary income account jumped 60.9 percent to $9.09 billion, driven by dividends and interest payments to non-resident investors.
Despite the declining surplus, Nigeria’s external reserves grew 13.8 percent, reaching $45.75 billion, providing a buffer against structural shifts in trade and investment flows.
The CBN report attributed the contraction in the current account surplus to multiple factors: a 14.41 percent drop in crude oil exports, $3.74 billion in crude oil imports by Dangote Refinery, a 13.6 percent rise in non-oil imports to $29.24 billion, and a 9.13 percent increase in net out-payments for services to $14.58 billion.
The report noted: “Provisional BOP statistics for 2025 show a current account surplus of $14.04 billion, lower than the $19.03 billion in the previous year but significantly higher than the $6.42 billion recorded in 2023. Major contributors to the decline include lower crude oil exports, refinery imports, rising non-oil imports, and increased out-payments for services.”
Analysts suggest that while the shortfall in oil revenue and foreign portfolio capital is a concern, the surge in FDI and the performance of the Dangote Refinery provide optimism for structural adjustments. These developments signal Nigeria’s gradual shift toward diversified revenue streams and stronger integration of refined petroleum and gas exports into the external account.
The BOP performance underscores the need for continued reforms to stabilise trade flows, manage external debt obligations, and attract long-term capital while mitigating exposure to volatile short-term portfolio inflows.
