Nigeria’s external position weakened in the third quarter of 2025, with the current account surplus falling by more than 40% to $3.42 billion, down from $5.81 billion in the previous quarter, according to provisional statistics released by the Central Bank of Nigeria.
The decline marks a significant contraction in the country’s external earnings cushion, even as crude oil exports—the backbone of Nigeria’s foreign exchange earnings—posted solid gains during the period.
Total export receipts climbed to $15.24 billion in Q3, up from $14.90 billion in the second quarter, buoyed primarily by improved performance in the petroleum sector. Crude oil earnings rose by over 10% to reach $8.45 billion, while refined petroleum product exports surged by 44% to $2.29 billion.
The jump in refined product exports reflects Nigeria’s evolving energy landscape, as the country moves closer to becoming a net exporter of refined petroleum—a long-awaited shift that could reshape its trade dynamics. Correspondingly, refined petroleum imports dropped by nearly 13% to $1.65 billion, signaling reduced dependence on foreign fuel supplies.
However, not all energy segments performed well. Gas export revenues fell sharply by 30% to $2.31 billion, while non-oil exports also dipped slightly to $2.19 billion from $2.34 billion in Q2.
Despite the export momentum, Nigeria’s import bill expanded to $10.30 billion from $9.61 billion in the prior quarter. Non-oil imports accounted for much of the increase, climbing to $7.08 billion. This uptick reflects sustained domestic demand for foreign goods and machinery, even as inflationary pressures and currency challenges persist.
The goods account remained in surplus at $4.94 billion, though this was narrower than the $5.28 billion recorded in Q2. More concerning was the widening deficit in the services account, which reached $4.07 billion—up from $3.74 billion—driven by higher spending on transport, travel, insurance, information technology, and government services abroad.
Perhaps the most striking development in the quarter was the sharp deterioration in the primary income account, which swung to a net debit of $2.95 billion from $1.25 billion in Q2. The Central Bank attributed this largely to domestic banks repatriating reinvested earnings from their foreign investments, alongside dividend and profit payments flowing out of the country.
This outflow underscores a persistent challenge for Nigeria: even as it earns more from exports, a significant portion of those gains is eroded by returns paid to foreign investors and repatriated profits.
Diaspora remittances, a critical lifeline for many Nigerian households, remained robust at $5.24 billion, only marginally lower than the previous quarter’s $5.30 billion. These inflows continue to support the secondary income account, which stood at $5.50 billion.
In a notable reversal, Nigeria’s financial account shifted from a net borrowing position of $6.90 billion in Q2 to a net lending position of $0.32 billion in Q3. This indicates that the country accumulated more foreign assets—including reserve holdings—than it received in new foreign investment.
Foreign direct investment inflows improved significantly, rising to $0.72 billion from just $0.09 billion in the prior quarter. However, portfolio investment inflows declined sharply to $2.51 billion from $5.28 billion, suggesting a waning foreign appetite for Nigerian securities amid ongoing currency volatility and policy uncertainty.
Despite the narrower current account surplus, Nigeria’s overall balance of payments recorded a surplus of $4.60 billion in Q3, a turnaround from the $0.27 billion deficit in Q2. This improvement helped boost external reserves to $42.77 billion by the end of September, up from $37.81 billion at the end of June—a development that should provide some breathing room for monetary authorities managing exchange rate pressures.
The Central Bank also noted that net errors and omissions—a statistical discrepancy often linked to unrecorded transactions—narrowed dramatically to $3.09 billion from $12.71 billion, suggesting better data capture or reduced informal cross-border flows.
While the rising reserves and improved oil export performance offer some reassurance, the underlying trends present a mixed picture. The contraction in the current account surplus, coupled with widening service deficits and substantial profit repatriation, highlights the structural vulnerabilities that continue to constrain Nigeria’s external position.
As the country navigates currency reforms and seeks to attract sustainable foreign investment, policymakers will need to balance the benefits of increased oil revenues against persistent capital outflows and import demand pressures.
The coming quarters will test whether Nigeria’s transition toward refined petroleum self-sufficiency can offset these headwinds and stabilize the external accounts on a more durable footing.
WHAT YOU SHOULD KNOW
Nigeria’s current account surplus fell sharply by 41% to $3.42 billion in Q3 2025, despite a 10% rise in crude oil exports and a 44% surge in refined petroleum exports. The gains were largely wiped out by increased imports, higher service payments abroad, and a massive $2.95 billion outflow from profit repatriation—mainly by domestic banks moving earnings from foreign investments.
While external reserves climbed to $42.77 billion and Nigeria is gradually becoming a net exporter of refined fuel, the country still faces a critical challenge: even as it earns more from oil, much of that money flows right back out through dividend payments, imported services, and foreign goods.
The transition to petroleum self-sufficiency offers hope, but structural issues around capital flight and import dependence remain major obstacles to sustaining a healthy external position.
