Nigeria Attracts $20.98bn Foreign Investments as CBN Reforms Strengthen FX Market, Reserves

Nigeria Attracts $20.98bn Foreign Investments as CBN Reforms Strengthen FX Market, Reserves

Nigeria has recorded a major rebound in foreign investor confidence, with foreign capital inflows rising to $20.98 billion in the first ten months of 2025 — the highest level in several years. This was disclosed by the Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, at the 2025 CIBN Annual Bankers’ Dinner in Lagos.

Cardoso said the surge represents a 70% increase over total inflows for 2024 and a 428% jump compared to 2023, reflecting renewed trust in the country’s economic direction and ongoing monetary reforms.

FX Reforms Deliver Stability

Highlighting the “visible transformation” in the foreign exchange market, Cardoso noted that the CBN has maintained the unification of FX windows and fully cleared the multi-billion-dollar FX backlog that previously weakened market confidence.

He explained that the introduction of the Nigerian Foreign Exchange Code and the deployment of the Electronic Foreign Exchange Management System (EFEMS) have improved transparency, enhanced surveillance, ensured mandatory order submissions, and strengthened price discovery.

According to him, these reforms have restored discipline to the FX market, reducing the premium between the official and parallel markets to below 2%, a massive improvement from over 60% a year earlier. He added that the CBN will soon release a revised FX Manual to further widen participation and entrench regulatory consistency.

External Sector Gains Momentum

Cardoso announced strong improvements in Nigeria’s external buffers, with foreign reserves rising to $46.7 billion by mid-November — the highest in nearly seven years — offering more than 10 months of import cover.

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He stressed that the growth in reserves is happening organically, driven by improved market efficiency, stronger non-oil exports, and rising capital inflows, rather than external borrowing.

Nigeria’s current account balance also strengthened significantly, climbing 85% to $5.28 billion in Q2 2025 from $2.85 billion in Q1, supported by increased non-oil export earnings and higher diaspora remittances, which rose by about 12%.

No Return to Ways and Means Borrowing

In a firm policy stance, the CBN Governor reiterated that the Bank will not revert to Ways and Means financing, the controversial practice of funding fiscal deficits.

“Our stance is unequivocal: there will be no return to the practice of financing fiscal deficits by the Central Bank,” Cardoso stated.

He acknowledged fiscal authorities for supporting reforms through the rollout of the Revenue Optimisation (RevOp) framework, the creation of the National Revenue Agency, and improvements to the Treasury Single Account (TSA).

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CBN’s 2026 Priorities

Cardoso unveiled the Bank’s strategic priorities for 2026, which include:

• Strengthening the banking system through rigorous supervision and better governance.
• Delivering durable price stability with an enhanced inflation-targeting framework.
• Expanding financial inclusion and modernising payments, particularly contactless payments.
• Encouraging responsible fintech innovation with stricter licensing and clear guardrails.
• Building stronger institutional capacity and improving operational efficiency.
• Enhancing collaboration with domestic and global regulators to reinforce Nigeria’s reputation as a trusted central bank.

Stronger Protection Against Shocks

He said Nigeria’s flexible FX regime, growing non-oil exports, and expanding services trade now provide better protection against external shocks such as oil-price volatility and shifts in global credit sentiment.

“With oil now contributing a smaller share of GDP and fiscal revenue, a sharp decline in oil prices would be cushioned by the new FX framework,” he said.

Commitment to Economic Stability

Cardoso reaffirmed that price stability remains the CBN’s top priority, adding that the Bank will continue to provide forward guidance, safeguard market integrity, and leverage technology — including AI-driven analytics — to enhance decision-making.

“By remaining disciplined, forward-looking and true to our mandate, we will ensure Nigeria’s economy remains stable, inclusive and primed for sustainable growth,” he concluded.

Nigeria Attracts $20.98bn Foreign Investments as CBN Reforms Strengthen FX Market, Reserves