• 02 Jun, 2025
• FAITH MIMDOO KEGH
• No comment

Nigeria Implements Economic Reforms to Tackle Forex Challenges Amid Declining Oil Prices.

Nigeria’s foreign exchange reserves, which fell consistently during the first four months of 2025, are beginning to recover slightly despite a downturn in global oil prices.

As of April, the reserves dropped to \$37.9 billion, mainly due to a 16.74% decline in crude oil prices, which fell from \$73.29 per barrel in January to \$62.78 by the end of May. The drop in prices followed a decision by OPEC+ to increase oil production by nearly one million barrels per day from April through June.

The global market faces continued pressure from overproduction, demand uncertainties, and geopolitical factors. Some projections suggest Brent crude could dip below \$50 per barrel before the year ends. If Nigeria’s production remains at around 1.5 million barrels per day, this would cause a 10% revenue shortfall compared to the country’s budget breakeven, potentially pushing the fiscal deficit to 6–7% of GDP and worsening inflation.

Despite these pressures, Nigeria’s foreign reserves began to rise again from \$37.93 billion in mid-April to \$38.46 billion by the end of May. This improvement is credited to policy responses from the Central Bank of Nigeria (CBN).

The CBN, under Governor Olayemi Cardoso, has introduced measures aimed at reducing dependency on imports by encouraging local production. This includes efforts to simplify diaspora remittances and support backward integration across sectors. Drawing on strategies similar to China’s export-led model, the bank is pushing for increased exports in agriculture, manufacturing, and the creative industries.

Cardoso pointed to Nigeria’s creative sector as a major opportunity, with potential to generate \$25 billion annually through music, film, and digital exports. He also called on businesses to embrace international markets and digital tools to increase foreign earnings.

In the telecom sector, Cardoso urged operators to reduce import dependence by locally manufacturing items like SIM cards, cables, and towers. During a meeting with Airtel Africa CEO Sunil Taldar, the CBN Governor stressed that local production would help ease forex pressure, support job creation, and strengthen the economy.

The telecom sector’s recovery continues, with subscriber numbers increasing after disruptions caused by the NIN-SIM registration policy. As of December 2024, active subscribers totaled 164.93 million, and internet users reached 139.28 million.

Cardoso’s reforms have also attracted renewed interest from foreign investors. Average daily turnover in the foreign exchange market surged 226% in the first half of last year, while portfolio inflows rose over 72%. Foreign reserves rose from \$32 billion in May 2023 to over \$40 billion—a nearly three-year high.

A current account surplus of \$6 billion in early 2024 was supported by reduced petroleum product imports, increased non-oil exports, and stronger remittance flows. Monthly remittances also doubled, reaching nearly \$600 million by August 2024.

To further support remittances, the CBN launched two new account types for Nigerians abroad—Non-Resident Nigerian Ordinary and Investment Accounts—aimed at facilitating remittance management and encouraging diaspora investment.

According to Dr. Aminu Gwadabe, President of the Association of Bureaux De Change Operators of Nigeria, these reforms have significantly improved remittance inflows, strengthening the naira and contributing to macroeconomic stability.

Western Union’s Mohamed Touhami el Ouazzani highlighted the social and economic value of diaspora remittances, noting that Africa received \$90 billion in remittances in 2023—comparable to the GDP of several countries.

FAITH MIMDOO KEGH

Manager – Oversees the daily operations, editorial planning, and strategic direction of the platform. A graduate with a solid academic foundation in media and communication, Faith brings a wealth of experience to the TokinPoint.

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