Depreciation of the Naira, Dangote Refinery Drive Nigeria’s $3.73bn Balance of Payments Surplus in Q1 2025

Nigeria recorded a balance of payments (BoP) surplus of $3.73 billion in the first quarter of 2025, a development economic experts have linked to the weakening of the naira and the increase in domestic fuel production from the Dangote Refinery.

This is the second consecutive quarter of surplus, underscoring a notable shift in Nigeria’s external position despite lingering structural challenges.

The data, released by the Central Bank of Nigeria (CBN), showed that the Q1 2025 surplus was only slightly lower than the $3.80 billion recorded in the final quarter of 2024 and marginally higher than the $3.69 billion recorded in the same period last year. This comes months after Nigeria posted a significant $6.83 billion surplus at some point in 2024.

According to the CBN, the goods account surplus rose significantly to $4.16 billion, up from $2.62 billion in Q4 2024. The improvement was driven by a 30.39% increase in non-oil exports to $2.66 billion and a rebound in gas exports, which also rose to $2.66 billion. Simultaneously, non-oil imports declined from $7.37 billion to $6.77 billion, reflecting the combined effects of naira depreciation and a shift toward local sourcing.

Total exports for the quarter climbed to $13.91 billion, marking a 9.79% increase from the previous quarter. Imports, on the other hand, dropped to $9.75 billion from $10.05 billion, largely due to reduced imports of petroleum products—a trend directly linked to output from the Dangote Refinery. The secondary income account also remained strong, maintaining a surplus of $5.29 billion.

Analysts’ View: Depreciation and Domestic Output Key to Gains

Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), noted that the naira’s continued depreciation is making it harder for businesses to import non-oil goods.

“Our largest imports in recent times have been the non-oil. Import is dropping because of exchange rate depreciation,” he said.

He added that the increased output from Dangote Refinery is discouraging reliance on foreign petroleum products: “With the full commencement of the Dangote Refinery, a lot of fuel importers are beginning to look inwards.”

Though there was a slight dip in the BoP surplus compared to the previous quarter, Yusuf dismissed it as marginal.

“For me, the decrease between the last quarter and this in the balance of payment surplus is quite marginal,” he said.

Another expert, Dr. Adam Abudu of the Society for Peacebuilding and Economic Advancement, emphasized the need for policy consistency to support domestic production.

“If you have a policy to encourage domestic investors, you should be consistent with it,” he said.

He praised Dangote’s refinery as a model for import substitution, suggesting that similar large-scale industrial ventures are key to sustaining BoP surpluses.

“Government needs more Dangote Refineries to have a continuous balance of payment surplus,” he stated.

Dr. Abudu also credited the Tinubu administration’s economic reforms for laying the foundation for back-to-back BoP surpluses.

“The ongoing reforms are also showing results,” he said. “We have to sustain the momentum for the next few quarters too.”

Financial Account and External Pressures

Despite the headline surplus, Nigeria’s financial account balance slightly declined to $7.58 billion, down from $7.82 billion in Q4 2024. The drop was attributed to significant divestments, the reversal of non-residents’ investments in CBN instruments, and a fall in loan liabilities from other depository corporations. In addition, the country continued servicing high external debt, which also weighed on the financial account.

Another concern is the sharp drop in external reserves, which fell to $37.82 billion at the end of March 2025, down from $40.19 billion in December 2024. The decline suggests ongoing currency support operations and external obligations are drawing heavily on reserves despite trade surpluses.

Meanwhile, net errors and omissions—used to track unrecorded financial flows—stood at $3.85 billion, a slight improvement from $4.02 billion in the previous quarter, but still indicative of unaccounted transactions.

Trade Surplus and Crude Oil Production

Data from the National Bureau of Statistics (NBS) reinforced the CBN’s findings, showing a trade surplus of N5.17 trillion in Q1 2025—up 51.07% from N3.42 trillion in Q4 2024. Total trade climbed to N36.02 trillion, a 6.19% increase year-on-year.

A key contributor was the sharp decline in petrol import bills, which dropped to N1.76 trillion from N3.81 trillion in Q1 2024, reflecting the ongoing ramp-up in local supply by the Dangote Refinery.

However, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reported that crude oil production fell to 1.45 million barrels per day in May 2025, indicating the country is still grappling with production challenges and possibly pipeline issues, oil theft, or underinvestment in the upstream sector.

While Nigeria’s back-to-back BoP surpluses are encouraging, they are being propped up by a mix of naira depreciation, lower imports, and an unusually strong surge in non-oil and gas exports. Analysts say the current trajectory is promising, but sustaining it will require more strategic investments in local manufacturing, aggressive support for non-oil exports, and steady policy execution.