Nigeria’s Net Foreign Exchange Reserves (NFER) have surged to $23.11 billion, marking their highest level in over three years, according to a statement released by the Central Bank of Nigeria (CBN) on Tuesday.
Understanding NFER
Net Foreign Exchange Reserves represent the portion of a country’s foreign reserves that remains after deducting short-term liabilities such as FX swaps and forward contracts. This figure reflects the actual reserves available to meet Nigeria’s immediate external obligations.
The latest figures show a significant increase from $3.99 billion at the end of 2023, signaling improved external liquidity, reduced short-term obligations, and renewed investor confidence. Comparatively, the NFER stood at $8.19 billion in 2022 and $14.59 billion in 2021. Meanwhile, gross external reserves have risen to $40.19 billion from $33.22 billion at the close of 2023.
Policy Measures Driving Growth
The CBN attributed the reserve growth to strategic policy measures, including reducing short-term FX liabilities and implementing reforms aimed at restoring confidence in the foreign exchange market. Additionally, increased FX inflows from non-oil sources contributed to the improvement.
CBN Governor Olayemi Cardoso emphasized that the rise in reserves was the result of deliberate economic policies.
“This improvement in our net reserves is not accidental; it is the outcome of deliberate policy choices aimed at rebuilding confidence, reducing vulnerabilities, and laying the foundation for long-term stability,” he stated.
Economic Outlook and Future Projections
Despite seasonal fluctuations and transitional adjustments in Q1 2025—such as significant interest payments on foreign-denominated debt—the CBN reassured that Nigeria’s economic fundamentals remain strong. It expects further reserve growth in Q2 2025, driven by improved oil production and a more favorable export environment boosting non-oil FX earnings.
“We remain focused on sustaining this progress through transparency, discipline, and market-driven reforms,” Mr. Cardoso added.
The CBN reaffirmed its commitment to prudent reserve management, transparent reporting, and macroeconomic policies designed to stabilize the exchange rate, attract investment, and strengthen Nigeria’s economic resilience.
From FX Shortages to Stability
Nigeria’s rising net reserves mark a turnaround from recent liquidity challenges. In previous years, the country struggled with chronic FX shortages due to heavy reliance on oil revenue, capital flight, and policy uncertainty. By 2023, dwindling reserves forced the CBN to clear a backlog of FX forwards, leading to sharp naira depreciation.
The current reserve buildup signals a more stable external position, reinforcing Nigeria’s economic recovery and resilience.
