Nigeria’s current account surplus is projected to fall sharply from 9.2% of GDP in 2024 to 2.7% in 2025, according to a recent report by CSL Stockbrokers, a subsidiary of FCMB Group. This substantial decline is largely attributed to lower global oil prices, which significantly affect Nigeria’s export earnings, given oil’s dominance in the country’s external trade.
Key Drivers Behind the Decline
1. Decline in Oil Prices and Export Revenues
Global crude oil prices have fallen by approximately 15% year-on-year in the first half of 2025. Consequently, Nigeria’s projected oil export earnings have been revised down to $36.4 billion, a 20% reduction compared to earlier forecasts. With crude oil accounting for over 85% of Nigeria’s export revenue, this downturn has had a direct impact on the current account balance.
2. Trade Balance Pressures
While there has been a moderate reduction in imports—helped by increased local refining capacity from the Dangote Refinery—the decline in exports has outweighed these gains. The result is a weakened trade surplus, further dragging down the current account position.
3. Persistent Deficits in Services and Income Accounts
Nigeria continues to face structural deficits in its services and income accounts. Annual services deficits, covering sectors such as travel and transportation, are estimated at $13.7 billion. Meanwhile, repatriation of profits by foreign investors has intensified, leading to a wider income account deficit.
4. Remittance Flows Remain Strong
On a positive note, remittance inflows are projected to increase from $23.8 billion in 2024 to $25.3 billion in 2025. However, new policy discussions in the United States regarding potential levies on outbound remittances may pose future risks.
Near-Term Performance and Economic Outlook
The Central Bank of Nigeria reported a current account surplus of $3.7 billion in Q1 2025, equivalent to roughly 2% of GDP. This marks a slight decline from $3.8 billion in Q4 2024 and reflects the beginning of the forecasted downward trend.
CSL analysts warn that if oil prices fall below $55 per barrel, even steady production levels might not prevent the current account from slipping into a deficit. On the other hand, if oil averages $70 per barrel, the surplus could improve by up to 2 percentage points.
Broader Balance of Payments Context
Despite the projected narrowing of the current account surplus, Nigeria ended 2024 with a combined current and capital account surplus of $17.22 billion. This contributed to an overall balance of payments surplus of $6.83 billion, supported by structural reforms including subsidy removal and naira unification. As a result, foreign reserves rose to $40.19 billion by year-end.
Policy Implications
- Oil Dependency: Nigeria remains highly vulnerable to oil price volatility. A modest fluctuation in oil markets could determine whether the country records a surplus or slips into deficit territory.
- Structural Challenges: Persistent deficits in the services and income accounts highlight the need for economic diversification.
- Reform Continuity: Sustaining recent reforms and boosting non-oil export performance will be critical to maintaining external balance.
- FX Reserve Management: Building up foreign exchange reserves remains essential for managing external shocks and supporting investor confidence.
Conclusion
Nigeria’s projected current account surplus of 2.7% in 2025 represents a significant drop from the 9.2% achieved in 2024. The outlook underscores the country’s vulnerability to oil price fluctuations and structural trade imbalances. While recent economic reforms have provided short-term buffers, long-term sustainability will depend on continued diversification and resilience-building in the external sector.
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