Nigeria’s foreign exchange market has entered a distinctly new phase, with private-sector driven inflows now forming the backbone of dollar liquidity in the economy.
By 2025, autonomous sources—ranging from diaspora remittances and portfolio investments to non-oil export proceeds and corporate capital flows—accounted for 64.94% of total FX inflows, according to the Financial Market Dealers Association (FMDA). This marks a steep rise from 59.62% in 2024 and just 36.44% in 2023, underscoring how rapidly private capital has overtaken traditional official sources.
In absolute terms, autonomous inflows surged to $72.91 billion in 2025, compared with $59.29 billion in 2024 and $41.80 billion in 2023. Within just two years, Nigeria has nearly doubled the scale of private dollar inflows into its economy.
Total FX inflows also strengthened, rising to $112.27 billion in 2025, up from $99.44 billion the previous year and $65.76 billion in 2023. Net inflow through the economy followed the same trajectory, climbing to $66.67 billion in 2025, compared with $58.84 billion in 2024.
What emerges is a market that is no longer predominantly dependent on the central bank for liquidity, but increasingly shaped by global investors, remitters, and commercial actors responding to Nigeria’s evolving macroeconomic environment.
CBN’s stabilising role persists amid changing market dynamics
While private inflows expanded sharply, the Central Bank of Nigeria (CBN) maintained a visible stabilisation role, even as its direct supply influence continued to adjust.
CBN FX sales rebounded significantly in 2025, rising 126.37% to $8.94 billion, after plunging to a multi-year low of $3.95 billion in 2024. In 2023, sales stood at $9.9 billion, highlighting the volatility in official intervention patterns over the three-year period.
However, CBN inflows remained relatively stable, easing slightly from $40.15 billion in 2024 to $39.36 billion in 2025, even as autonomous inflows surged by more than $13 billion within the same period.
On the outflow side, CBN transactions increased modestly to $32.79 billion in 2025, while autonomous outflows climbed more sharply to $12.80 billion, reflecting deeper private-sector participation in FX usage across the economy.
Overall, the data points to a gradual repositioning of the apex bank—from primary liquidity provider to market stabiliser in a more decentralised FX ecosystem.
Rising dominance of “invisible” transactions in FX demand
Beyond inflows, a major structural shift is also visible on the demand side of the FX market.
Total FX utilisation rose to $47.17 billion in 2025, driven largely by a surge in services-related transactions rather than traditional imports.
The most striking development was the explosion in invisible-related FX demand, which jumped to $27.27 billion in 2025, compared with $11.10 billion in 2024. Within this category, financial services alone accounted for a substantial $21.22 billion, signalling the growing weight of cross-border financial activity, repayments, and service-linked capital flows.
Import-related FX demand rose more moderately to $19.90 billion, up from $15.54 billion in 2024, indicating that merchandise trade is no longer the dominant driver of FX pressure.
Sectoral breakdowns further highlight the shift:
- Industrial demand rose to $8.43 billion
- Oil sector FX demand nearly doubled to $4.98 billion
- Business services surged sharply to $3.48 billion
- Educational services collapsed to $55.16 million, down from $396.40 million in 2023
Taken together, these figures suggest that Nigeria’s FX market is increasingly shaped by services, finance, and global payments rather than physical goods trade alone.
“The reform has positioned the economy to attract those inflows” — experts weigh in
Analysts largely agree that the changes reflect the impact of Nigeria’s broader macroeconomic reforms, particularly exchange rate unification and liberalisation measures introduced in 2023.
Dr. Muda Yusuf, Convener of the Centre for the Promotion of Private Enterprise (CPPE), attributed the surge in private capital inflows directly to policy direction:
“The autonomous inflows are driven by the reform. Remittances from the diaspora, inflows from foreign portfolio investors, non-oil export proceeds — all manner of things outside the traditional sources of our forex. This reflects the fact that the reform has positioned the economy to attract those inflows,” he said.
On the rebound in central bank activity, he cautioned against overinterpretation:
“It is not necessarily because the CBN has significantly increased its intervention. A lot of inflows are coming in. Those are not CBN funds. In fact, there was a time the CBN was even buying forex on the market because of the liquidity. The bigger factor is the supply side — the fact that autonomous inflows have increased significantly,” he said.
He also offered context on the surge in invisible transactions:
“Invisible covers a lot of things. When you are paying foreign debt, it is a financial services transaction. When airlines come to Nigeria, when shipping companies operate here, when expatriates come into oil and gas and tech — all of these services have to be paid for in foreign currency.”
Financial services dominate FX usage, raising structural concerns
Market participants are increasingly paying attention to the composition of FX demand, particularly the dominance of financial services within invisible transactions.
Mr. Charles Fakrogha, CEO of ECL Asset Management, noted that while activity reflects a more open economy, imbalances remain:
“Financial services — you have seen a lot of activities. We have seen so many financial institutions springing up. And yet the real sector is not being carried along,” he said.
He warned that capital may be drifting toward safer financial instruments rather than productive investment:
“When it is tough for financial services to give out loans and recover them, what happens? They go to the treasury bills market — safe investment. And the real sector suffers. These are the structural imbalances in the economy that we are seeing.”
Fakrogha also linked improvements in FX inflows to exchange rate unification:
“That is the fundamental of it. The unification has closed the gap for unnecessary speculation. The CBN has done quite a lot in terms of maintaining stability.”
Capital market confidence and diaspora inflows gain momentum
Other analysts emphasised the role of financial sector reforms and capital market confidence in driving inflows.
Mr. Aruna Kebira, CEO of Globalview Capital, highlighted the importance of institutional strengthening:
“There is no direct investor that would not like to do business with a well-capitalised stockbroking firm. The regulation is so strong. All the banks are recapitalised, insurance companies are in the process of recapitalisation, and PFAs are also being recapitalised. Things have actually opened up,” he said.
He also pointed to growing diaspora participation:
“Do you know that Nigerians in diaspora now have serious confidence in the Nigerian stock market? The movement from 58,000 to 250,000 points — it is not magic. Money is coming in. It is for investment,” he said.
Kebira further noted that diaspora investors are increasingly positioning themselves ahead of major investment opportunities, including anticipated listings linked to large-scale industrial projects.
Key structural implications for Nigeria’s FX future
Nigeria’s FX transformation is unfolding against the backdrop of sweeping reforms that unified exchange rates in 2023 and reduced arbitrage-driven distortions in the market.
However, the data also reveals emerging vulnerabilities:
- Heavy reliance on portfolio inflows introduces sensitivity to global interest rate cycles
- Financial services dominate FX usage, raising questions about real-sector transmission
- Manufacturing FX demand remains relatively constrained despite overall recovery
- Rising education costs are reshaping human capital flows, with overseas study demand collapsing
At the same time, some analysts view these shifts as part of a necessary adjustment phase. The decline in educational FX demand, for instance, is increasingly interpreted as a structural consequence of naira depreciation, which may encourage domestic investment in education.
As one expert noted, the changing cost structure is “incentivising people to look inwards.”
Outlook: stronger inflows, but questions on durability
While Nigeria’s FX market has clearly strengthened in terms of liquidity and participation, the central policy question remains whether the 2025 gains can be sustained.
The growing dominance of autonomous inflows suggests improved investor confidence and deeper integration with global capital markets. Yet the reliance on financial services and portfolio flows leaves the system exposed to external shocks.
The evolution underway is therefore not just about volume, but about composition—and whether Nigeria can convert short-term capital inflows into long-term productive investment that stabilises the naira beyond cyclical gains.