The Central Bank of Nigeria (CBN) announced a significant positive shift in the nation’s balance of payments (BOP) for the 2024 financial year, recording a surplus of $6.83 billion. This marks a substantial improvement from the deficits of $3.34 billion and $3.32 billion experienced in 2023 and 2022, respectively. The CBN attributes this positive turnaround to a combination of factors, including implemented macroeconomic reforms, improved trade performance, and renewed investor confidence in the Nigerian economy. These factors contributed to increased inflows across various segments, bolstering the nation’s economic resilience.
A key driver of this positive BOP position was the robust performance of remittance inflows, which rose by 8.9% year-on-year to reach $20.93 billion. This underscores the continued importance of diaspora remittances to the Nigerian economy. A significant portion of this growth came from inflows through International Money Transfer Operators (IMTOs), which surged by 43.5% to $4.73 billion, up from $3.30 billion in 2023. This increase indicates a stronger engagement from the Nigerian diaspora, highlighting the impact of targeted policies aimed at facilitating these crucial inflows. Official development assistance also contributed to the positive trend, rising by 6.2% to $3.37 billion.
The current and capital account also played a vital role in achieving the surplus, posting a positive balance of $17.22 billion. This was primarily driven by a substantial goods trade surplus of $13.17 billion, reflecting a healthy trade balance. A breakdown of the trade figures reveals significant growth in non-oil exports, which rose by 24.6% to $7.46 billion, demonstrating the success of diversification efforts. Gas exports also witnessed a substantial increase of 48.3% to $8.66 billion, contributing significantly to export earnings. Simultaneously, imports saw a decline, with petroleum imports falling by 23.2% to $14.06 billion and non-oil imports decreasing by 12.6% to $25.74 billion. This combination of export growth and import reduction significantly contributed to the overall positive trade balance.
On the financial account side, Nigeria recorded a net acquisition of financial assets totaling $12.12 billion. Portfolio investment inflows more than doubled, with a remarkable 106.5% increase to $13.35 billion, indicating renewed investor confidence in the Nigerian market. Resident foreign currency holdings also grew, adding $5.41 billion to the overall financial account balance. However, foreign direct investment (FDI) experienced a decline of 42.3%, falling to $1.08 billion. While this drop in FDI presents a potential area of concern, the overall positive trends in portfolio investment and resident foreign currency holdings mitigated the impact.
The positive developments extended to Nigeria’s external reserves, which increased by $6 billion to reach $40.19 billion by the end of 2024. This substantial increase strengthens the country’s foreign exchange buffer, providing greater resilience against external shocks and enhancing the nation’s capacity to manage exchange rate volatility. The improved external position is attributed to a combination of policy reforms, including the liberalization and unification of the foreign exchange market, a disciplined monetary policy stance, and coordinated fiscal and monetary interventions. These measures have created a more stable and attractive investment environment, contributing to the observed improvements in various economic indicators.
Furthermore, the CBN highlighted improvements in data quality and reporting accuracy. Net errors and omissions, a measure of data discrepancies, decreased significantly by 79.5% to negative $5.10 billion in 2024, down from $24.90 billion in the previous year. The CBN attributes this improvement to enhanced data capture and transparency efforts. The CBN Governor expressed optimism about the positive economic developments, citing the BOP surplus as evidence of effective policy implementation and a commitment to macroeconomic stability. The improved external position is expected to benefit various stakeholders, including investors, businesses, and individuals, contributing to overall economic growth and stability.
