On Tuesday, the Central Bank of Nigeria (CBN) announced that its net foreign exchange reserves (NFER) had risen to $23.11 billion in 2024, marking the highest level of foreign exchange accretion in three years.
This figure represents a substantial increase from $3.99 billion in 2023, $8.19 billion in 2022, and $14.59 billion in 2021. Concurrently, the bank reported that gross external reserves grew to $40.19 billion in 2024, up from $33.22 billion in 2023, reflecting a $6.97 billion improvement.
The CBN attributed the $23.11 billion NFER to a series of deliberate and strategic measures designed to enhance the country’s external liquidity, reduce short-term obligations, and restore investor confidence. A key component of this improvement was a significant reduction in short-term foreign exchange liabilities, notably FX swaps and forward contracts, which had previously weighed on the reserve position. This adjustment bolstered the NFER, a metric that subtracts near-term liabilities from gross reserves to provide a clearer picture of funds available to meet immediate external obligations.
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The bank also highlighted a notable increase in foreign exchange inflows, particularly from non-oil sources, which complemented traditional oil revenues and contributed to a more diversified reserve base. Additionally, policy actions aimed at rebuilding confidence in the FX market and strengthening reserve buffers played a critical role in driving the accretion.
CBN Governor Olayemi Cardoso emphasized the intentional nature of these outcomes, stating, “We remain focused on sustaining this progress through transparency, discipline, and market-driven reforms.”
He further elaborated, “The improvement in net reserves was not accidental but the outcome of deliberate policy choices aimed at rebuilding confidence, reducing vulnerabilities, and laying the foundation for long-term stability.”
The strengthening of the reserve position was also evident in the gross external reserves, which rose by nearly $7 billion, signaling a more robust capacity to withstand external economic pressures. The CBN underscored that this progress reflected a more transparent and higher-quality reserve position, better equipping Nigeria to manage potential shocks.
The positive trajectory of Nigeria’s reserves has continued into 2025, according to the CBN. Despite seasonal and transitional adjustments in the first quarter, including significant interest payments on foreign-denominated debt, the underlying fundamentals of the reserve position remained intact. The bank projects a steady uptick in reserves through the second quarter of 2025, underpinned by improved oil production levels and a more favorable export growth environment expected to enhance non-oil FX earnings.
The CBN anticipates that these factors will further diversify external inflows, reducing Nigeria’s historical dependence on volatile oil markets. The bank reiterated its commitment to prudent reserve management, transparent reporting, and macroeconomic policies aimed at stabilizing the exchange rate, attracting investment, and fostering long-term economic resilience.
Looking Back At Nigeria’s FX Reserves
The CBN’s announcement of a $23.11 billion NFER has reignited a longstanding debate about the accuracy and transparency of Nigeria’s reserve reporting. In 2023, JPMorgan, a prominent global financial institution, estimated that the CBN’s net FX reserves stood at approximately $3.7 billion at the end of 2022, a sharp decline from $14.0 billion at the end of 2021. The firm stated, “We estimate that CBN’s net FX reserves were around US$3.7bn at the end of last year, from US$14.0bn at end-2021.”
This estimate was supported by Nigeria’s inability to clear over $7 billion in FX obligations, including earnings repatriation for foreign airlines, which had accumulated due to liquidity constraints. In contrast, the CBN reported gross reserves of $37.09 billion as of December 2022 and $40.52 billion as of December 31, 2021, dismissing JPMorgan’s figures as inaccurate.
The significant gap between the CBN’s gross reserve claims and JPMorgan’s net reserve estimate fueled skepticism about the true state of Nigeria’s financial health, with analysts arguing that the focus on gross figures obscured underlying liabilities.
Renewed Debate and Analyst Concerns
The CBN’s latest report of a $23.11 billion NFER has intensified scrutiny, with analysts questioning whether the figure reflects genuine progress or masks persistent vulnerabilities. Financial analyst Kelvin Emmanuel has been particularly vocal, challenging the CBN to substantiate its claims with detailed financial disclosures.
He stated, “Let the Central Bank comply with sections 50 (1)(3) of the CBN Act and publish its annual financial statement, let us see if the net external reserves is actually $23.1bn.”
Emmanuel further cautioned against the politicization of reserve data. He said, “There are places where you don’t bring that slimy political propaganda to, and reserve management as one of the 5 pillars that forms the basis of Central Banking is an integral part, because it has a direct consequence on managing monetary policy.”
However, some analysts agree that if accurate, the $23.11 billion NFER, though little, signals a strengthened capacity to manage external shocks, such as fluctuations in global oil prices or economic downturns, while also enhancing investor confidence and providing greater flexibility for monetary policy.
A robust reserve position has been touted as the key to stabilizing the naira, attracting foreign investment, and supporting broader economic growth.
