Despite stronger gas exports and refinery gains, falling crude revenue and rising foreign outflows weigh on Nigeria’s external balance….
Nigeria’s external finances came under fresh pressure in 2025 as the country’s current account surplus narrowed significantly, highlighting the continued vulnerability of its economy to fluctuations in oil earnings and capital flows.
New data from the Central Bank of Nigeria’s Balance of Payments report shows that the current account surplus declined by 26.2 percent to $14.04 billion, down from $19.03 billion recorded in 2024. Although still firmly in surplus, the drop reflects a combination of weaker oil exports, rising imports, and increased payments to foreign investors.
At the heart of the decline was a sharp fall in crude oil exports, which dropped by 14.4 percent to $31.54 billion. This came despite a strong performance in gas exports, which surged by 21.4 percent to $10.51 billion. However, the gains from gas were not enough to offset the shortfall from crude, which remains Nigeria’s dominant export earner.
A notable shift in the country’s trade dynamics came from the growing influence of domestic refining. The Dangote Refinery played a key role in boosting refined petroleum exports, contributing $6.13 billion and helping reduce fuel import costs by nearly 29 percent from $14.06 billion to $10 billion. Still, the refinery’s importation of $3.74 billion worth of crude oil added to overall import pressures.
Despite these challenges, Nigeria’s goods account posted a stronger surplus of $14.51 billion, supported by reduced fuel imports and increased export activity. However, this improvement was overshadowed by rising deficits in other areas of the current account.
The services account deficit widened to $14.58 billion, driven by higher spending on transportation, travel, and insurance. At the same time, net outflows in the primary income account surged by 60.9 percent to $9.09 billion, largely due to increased dividend and interest payments to foreign investors.
On the financial side, Nigeria experienced a dramatic reversal. The country moved from a net lending position of $9.65 billion in 2024 to a net borrowing position of $1.69 billion in 2025. This shift was primarily caused by a steep decline in Foreign Portfolio Investment inflows, which fell by 48.3 percent to $8.04 billion, signaling reduced appetite from short-term investors.
In contrast, Foreign Direct Investment recorded a strong rebound, rising by 149.1 percent to $4.01 billion. This suggests that while speculative capital may be retreating, long-term investors are showing renewed confidence in Nigeria’s economic prospects, particularly in equity investments and reinvested earnings.
Meanwhile, Nigeria’s external reserves provided a bright spot, growing by 13.8 percent to close the year at $45.75 billion. This increase offers a critical buffer as the country navigates ongoing structural changes in trade and investment flows.
Overall, the 2025 Balance of Payments data paints a complex picture: one of resilience supported by reforms and industrial growth, but still constrained by dependence on oil revenues and exposure to global financial shifts.
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