Current Account Performance and Trade Dynamics
Data from the Central Bank of Nigeria (CBN) shows the country’s current account recorded a surplus of $3.73 billion in Q1 2025, down slightly from $3.80 billion in Q4 2024 but marginally higher than the $3.69 billion posted in the same period of 2024.
A key driver of the positive balance was the goods account, which improved significantly. The CBN reported that the goods account balance rose to $4.16 billion in Q1 2025 from $2.62 billion in the preceding quarter. This improvement was attributed to robust export growth and a decline in non-oil imports.
Total exports increased by 9.79 percent, reaching $13.91 billion, while imports fell to $9.75 billion from $10.05 billion. Notably, non-oil exports grew by over 30 percent to $2.66 billion, with gas exports also rising sharply. At the same time, non-oil imports declined from $7.37 billion to $6.77 billion, easing pressure on the current account.
Impact of Dangote Refinery and Fuel Imports
The commencement of large-scale operations at the Dangote Refinery played a central role in reducing Nigeria’s fuel import bill. The refinery's ramp-up has supplied more fuel domestically, decreasing reliance on costly imports.
According to the National Bureau of Statistics (NBS), Nigeria’s petrol import bill fell sharply to ₦1.76 trillion in Q1 2025, down from ₦3.81 trillion in the same period of 2024. This helped the country record a trade surplus of ₦5.17 trillion for the quarter, representing a 51 percent increase from the previous quarter’s ₦3.42 trillion.
The broader impact of the refinery’s production is being felt across the balance of payments by cutting import costs and supporting the local currency, even as depreciation pressures continue.
Currency Depreciation and Import Trends
Economic analysts have linked the reduction in imports partly to the depreciation of the naira, which has made foreign goods more expensive. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), noted that the exchange rate environment is discouraging imports.
“Our largest imports in recent times have been non-oil. Import is dropping because of exchange rate depreciation. Depreciation of the naira makes import more difficult for importers,” he explained.
He also described the quarter-to-quarter decline in the surplus as marginal, suggesting that underlying trends remain positive.
Expert Views on Policy Consistency and Domestic Production
Another analyst, Dr. Adam Abudu of the Society for Peacebuilding and Economic Advancement, called for consistent policies to support domestic production. He emphasized the need for Nigeria to strengthen its ‘Nigeria First’ agenda to encourage investment in local industries.
“If you have a policy to encourage domestic investors, you should be consistent with it,” he argued. He praised the role of the Dangote Refinery in reducing imports and highlighted the need for more such investments to sustain balance of payments surpluses.
Dr. Abudu also commended the government's reform agenda. “The ongoing reforms are also showing results, given the fact that we have recorded two consecutive quarters of balance of payments surplus. We have to sustain the momentum for the next few quarters too,” he said.
Financial Account Developments
While the current account remained in surplus, the financial account showed a balance of $7.58 billion in Q1 2025, slightly lower than $7.82 billion in Q4 2024. The CBN attributed this decline to a reduction in portfolio and other investment liabilities, driven by divestments and a reversal of non-resident investments in CBN bills.
Additionally, significant external debt servicing and a drop in loan liabilities from other depository corporations contributed to the weaker financial account performance.
External Reserves and Untracked Flows
Despite improvements in trade and the current account, Nigeria’s external reserves declined to $37.82 billion at the end of March 2025, down from $40.19 billion in December 2024. Analysts view this as a sign of ongoing challenges in maintaining foreign exchange buffers, even as trade improves.
Net errors and omissions — often seen as a proxy for untracked or informal capital flows — also remained significant at $3.85 billion in Q1 2025, only slightly down from $4.02 billion in the previous quarter.
Crude Oil Production Trends
In a related development, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reported that crude oil production fell to 1.45 million barrels per day in May 2025. While oil remains a major source of foreign exchange, these production challenges highlight the importance of diversifying the export base.
Outlook
Nigeria’s balance of payments position in early 2025 offers a mixed picture. While the country benefits from higher exports, lower imports, and local fuel production, it still faces headwinds from external debt service pressures, currency depreciation, and oil sector volatility.
Economic experts emphasize that sustaining reforms, promoting domestic production, and ensuring consistent policy support for local investors will be key to maintaining and expanding the balance of payments surplus in coming quarters.