Nigeria's Current Account Surplus Contracts Sharply Amid Oil Export Slump and Investment Realignments
Nigeria's crucial current account, a key indicator of the nation's trade balance, experienced a significant contraction in 2025, shrinking by 26.2% to $14.04 billion. This marks a notable decrease from the $19.03 billion recorded in the previous year, according to recent data released by the Central Bank of Nigeria (CBN) in its Balance of Payments report.
Driving Factors Behind the Contraction
The primary catalyst for this decline was a substantial 14.4% drop in crude oil exports, which fell from $36.85 billion in 2024 to $31.54 billion. This shortfall in Nigeria's leading export revenue occurred despite a robust 21.4% surge in gas exports, which climbed to $10.51 billion, offering a partial offset.
Several other factors contributed to the narrowed surplus:
- Decreased Crude Oil Exports: A significant 14.4% reduction from the previous year.
- Dangote Refinery's Crude Oil Imports: The refinery imported $3.74 billion worth of crude oil, impacting the net export figures.
- Increased Non-oil Imports: Non-oil imports rose by 13.6%, from $25.74 billion to $29.24 billion.
- Higher Service Account Out-payments: Net out-payments for services increased by 9.13%, from $13.36 billion to $14.58 billion.
Dangote Refinery Boosts Goods Account Amidst Shifts
Despite the overall current account contraction, the Goods Account, a subset reflecting merchandise trade, recorded a higher surplus of $14.51 billion. A major contributor to this positive performance was the Dangote Refinery, which injected $6.13 billion in refined petroleum exports into the economy. This unprecedented contribution significantly helped slash fuel imports by 28.9%, reducing them from $14.06 billion to $10.00 billion and underscoring the refinery's transformative impact on Nigeria's trade dynamics.
Financial Account Reverses Course with Investment Shifts
The Financial Account witnessed a dramatic reversal, moving 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 largely propelled by a sharp 48.3% crash in Foreign Portfolio Investment (FPI) inflows, which plummeted from $15.55 billion to $8.04 billion, reflecting a decrease in short-term investor confidence.
Conversely, Foreign Direct Investment (FDI) inflows showcased remarkable resilience and growth, increasing robustly by 149.1% to $4.01 billion from $1.61 billion in 2024. This substantial rise indicates a renewed and strengthened long-term investor confidence in the Nigerian economy, particularly in equity investments and reinvested earnings.
Rising Pressures from Services and Income Payments
Further compounding the pressure on the Balance of Payments were escalating out-payments in both the services and primary income accounts. The deficit in the services account expanded to $14.58 billion, driven by increased expenditure on transportation, travel, and insurance services. Similarly, net out-payments in the primary income account surged by 60.9% to $9.09 billion, primarily attributed by the CBN to a spike in dividends and interest payments flowing to non-resident investors with portfolio and direct investments in Nigeria.
External Reserves Provide Economic Buffer
In a positive development, Nigeria's external reserves recorded a healthy leap of 13.8%, concluding the year at an impressive $45.75 billion. This significant growth in reserves offers a crucial buffer, enhancing the economy's stability and its capacity to navigate the structural shifts in its trade and investment balances.