Capital flight weighs on Nigeria’s balance of payments in Q1
Nigeria’s balance of payments came under pressure in the first quarter of 2025, as large-scale capital outflows driven by offshore investor exits and global uncertainty weakened the country’s financial position and external reserves.
Provisional data from the Central Bank of Nigeria (CBN) showed that Nigeria recorded a current account surplus of $3.73 billion, marginally lower than the $3.80 billion in Q4 2024.
Despite the surplus, the overall balance of payments registered a deficit of $2.77 billion, largely due to steep capital reversals and weak financial account performance.
The sell-off by offshore investors—triggered by global risk aversion and US tariff threats—resulted in a sharp reversal of $5.03 billion in portfolio investments and drove demand for foreign exchange higher, forcing the CBN into aggressive intervention to defend the naira.
Export earnings provided some cushion, rising 9.79 per cent to $13.91 billion, supported by stronger oil and non-oil export volumes. Gas exports jumped by 26.7 per cent, while non-oil and electricity exports rose by 30.39 per cent.
At the same time, imports fell to $9.75 billion from $10.05 billion, driven by reduced demand for petroleum and non-oil goods. The depreciation of the naira enhanced the competitiveness of Nigerian exports, further supporting the trade balance.
However, the financial account painted a weaker picture. Direct investment inflows dropped to $0.25 billion, while other investments saw a net outflow of $4.32 billion due to divestments from CBN instruments and large external debt repayments. Net errors and omissions also stood at $3.85 billion.
Nigeria’s external reserves declined sharply to $37.82 billion by March-end from $40.19 billion in December 2024.
Analysts at Cowry Asset Limited warned that while the current account remains resilient, the sharp capital outflows and declining reserves reflect ongoing external vulnerabilities and waning investor confidence in the short term.
