Nigeria’s foreign exchange reforms are beginning to yield results, with rising capital inflows, stronger reserves, and improving investor sentiment boosting confidence in the naira’s long-term stability.
Analysts note that the Central Bank of Nigeria’s (CBN) market-driven policies, backed by fiscal adjustments from the Federal Government, are positioning Africa’s largest economy for resilience, growth, and global competitiveness.
Investor optimism has been reinforced by higher non-oil exports, limited incentives for speculation, and a more transparent FX regime.
Over the past week, the naira appreciated by 1.1 percent to close at ₦1,520/$ in the official market, aided by a $50 million CBN intervention and fresh foreign portfolio inflows following successful Open Market Operation (OMO) auctions.
According to the National Bureau of Statistics (NBS), capital importation reached $5.64 billion in Q1 2025—a 67 percent increase from the same period in 2024. Foreign Portfolio Investment (FPI) dominated at $5.2 billion, with the banking sector attracting $3.1 billion.
“The long-term stability of the naira is now more likely given the stronger pipeline of inflows, rising reserves, and reduced incentives for speculation,” President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe said.
Gross external reserves have also climbed steadily, hitting $41.1 billion as of August 22—the highest since December 2021—reflecting both stronger inflows and improved reserve management.
Inflation has eased to 21.88 percent in July, underlining the effect of reforms such as exchange rate unification, fuel subsidy removal, and stricter fiscal discipline that curtailed deficit financing.
“These reforms have created a rules-based system that is attracting investors and stabilising macroeconomic conditions,” analysts at Cordros Securities wrote.
Under Governor Olayemi Cardoso, the CBN has pursued policies to deepen FX liquidity and simplify inflows, including:
Clearing a $7 billion FX backlog, praised by the World Bank as confidence-restoring.
Adopting the “willing buyer, willing seller” FX model.
Streamlining diaspora remittances through new International Money Transfer Operators (IMTOs).
Reducing reliance on direct interventions in favour of market pricing.
Nigeria’s return to international capital markets in late 2024 further signalled renewed confidence, earning credit rating upgrades and lowering its sovereign risk premium.
NBS data show most FPI inflows went into money market instruments ($4.2bn), bonds ($877m), and equities ($117m). Afrinvest West Africa reported portfolio flows jumped 150 percent year-on-year, driven by higher yields and stronger reform momentum.
The recent rebasing of Nigeria’s GDP also highlighted structural shifts. Statistician-General Adeyemi Adeniran confirmed the nominal GDP rose from ₦205 trillion in 2019 to ₦372.8 trillion in 2024, reflecting the growing importance of agriculture and services.
Development experts argue this improves Nigeria’s visibility to investors while uncovering new opportunities in industries such as entertainment and mining.
Looking ahead, President Bola Tinubu’s administration has set a $1 trillion economy target by 2030.
To support this, the CBN has launched fresh bank recapitalisation, ensuring lenders can finance large-scale infrastructure and industrial projects.
“Nigeria appears to be back in business as long-awaited reforms take shape,” said Emre Akcakmak, portfolio manager at East Capital, citing freer FX repatriation and improved currency liquidity.
Analysts caution, however, that external shocks such as oil price swings or global monetary tightening remain risks.
Still, the CBN has pledged prudent reserve management, continued diversification of FX earnings, and expanded support for non-oil sectors including agriculture, gas, technology, and services.
With rising inflows, stronger reserves, moderating inflation, and a firmer naira, Nigeria’s reforms are gradually reshaping investor perception.
For a nation long beset by currency instability and inflation, the policy shift marks a decisive break from the past.
Sustained reforms could provide the foundation for Nigeria’s ambition to become a $1 trillion economy by 2030—anchored on a stable naira, a resilient banking system, and a more diversified export base.
Tribune
