Muhammad Sanni Abdullahi, deputy governor for economic policy at the Central Bank of Nigeria (CBN), says Nigeria’s net foreign reserves had fallen to just $800 million before the apex bank embarked on a series of macroeconomic reforms.
Abdullahi spoke on Tuesday at a policy forum organised by
Agora Policy, a prominent Nigerian think tank.
The CBN official said the low reserves reflected years of
distortions in the economy, including mismanaged foreign exchange allocation
and unsustainable petroleum subsidies, which, together, cost the nation about
six percent of the gross domestic product (GDP).
Earlier in March, the CBN said Nigeria’s net foreign
exchange reserves (NEFR) at the end of 2025 was $34.80 billion — exceeding the
country’s total gross reserves recorded in 2023.
The figure marked 50.58 percent or $11.69 billion increase
compared to the net reserves of $23.11 billion recorded in 2024, and 772.18
percent or $30.81 billion higher than the $3.99 billion recorded in 2023.
Net international reserves are defined as the difference
between reserve assets and reserve liabilities.
“What we were worth as an economy of over 200 million people
was about $800 million in net reserves. Today we’re at $32 billion,” Abdullahi
said.
According to the CBN deputy governor, Nigeria also faced a
$7 billion backlog owed to businesses and investors, which had undermined
credibility and discouraged capital inflows.
He said the country faced a “breaking point” in 2023, with
revenue collapse and growing inflation threatening government operations at all
levels.
“At that time, FX flows had consistently declined. Foreign
portfolio investment wasn’t coming in, and we had a $7 billion backlog that the
nation simply could not absorb,” he said.
“These distortions, alongside petroleum subsidies, were
costing the economy about six percent of GDP.
“These were monies that companies had paid into the Central
Bank, and the Bank had not been able to cover over one or two years. You can
imagine the loss of confidence.”
He described the reforms initiated after October 2023 as
“necessary to stabilize the economy and restore investor confidence”.
“We were really in a crisis situation… if you had a choice,
do you not move out of the way and take the right decisions, however painful
they may be?” he said.
‘FX DISTORTIONS AND FUEL SUBSIDY NEARLY COLLAPSED ECONOMY’
Abdullahi said the combination of multiple exchange rates
and the petroleum subsidy had created incentives for rent-seeking, reduced
investment, and eroded revenues.
“There was one exchange rate where the privileged parts of
society got access, and you could flip it immediately when you came out as a
billionaire,” he said.
The deputy governor said foreign portfolio investment and
non-oil exports had both crashed, while the oil sector was contracting for
nearly two-and-a-half years prior to reforms.
“FDI had consistently been tanking because of multiple
exchange rate policies. Non-oil exports had also collapsed. Cocoa exports that
were $2 billion in 2015 had fallen to less than $300 million by 2018,” he said.
The deputy governor said reforms have begun to yield
tangible results.
“Inflation has been declining for 19 months, food inflation
is at its lowest level in 13 years… portfolio investors now rank Nigeria first
among emerging markets,” Abdullahi said.
“Today we’re an economy that is inspiring confidence
everywhere we go.”
He also highlighted a recovery in non-oil exports, which
generated about $6 billion last year, with a target of $12 billion in the near
term.
“We have turned away from the imbalances we met and are on a
strong footing toward a positive economic trajectory,” he said.
While he acknowledged lingering social challenges, Abdullahi
said the economy is “on a strong footing” and transitioning toward sustainable
growth.
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