Nigeria’s net foreign reserves once dropped to $800m before reforms, says CBN deputy governor

DEPUTY Governor for Economic Policy at the Central Bank of Nigeria (CBN), Mr Muhammad Sanni Abdullahi, has disclosed that Nigeria’s net foreign reserves had dwindled to about $800 million before the apex bank introduced sweeping macroeconomic reforms.

Abdullahi made the remarks on Tuesday while speaking at a policy forum organised by Agora Policy, a Nigerian public policy think tank.

According to him, the extremely low reserve level was the result of long-standing structural distortions in the economy. He cited poorly managed foreign exchange (FX) allocations and the burden of fuel subsidies as major contributors, noting that both factors together drained roughly 6 percent of Nigeria’s gross domestic product.

Earlier in March, the CBN had reported that the country’s net foreign exchange reserves (NEFR) stood at $34.80 billion at the end of 2025, a level higher than Nigeria’s total gross reserves recorded in 2023.

The figure represents a significant improvement, rising by 50.58 percent, or $11.69 billion, compared with $23.11 billion in 2024. It also marks a surge of 772.18 percent, equivalent to $30.81 billion, from the $3.99 billion recorded in 2023.

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Net international reserves refer to the difference between a country’s reserve assets and its reserve liabilities.

Reflecting on the earlier situation, Mr Abdullahi said the scale of the crisis was stark for a country of more than 200 million people.

“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,” he said.

The deputy governor added that Nigeria also faced a backlog of about $7 billion owed to businesses and investors, a situation that damaged the country’s credibility and discouraged foreign capital inflows.

He explained that the country reached a critical point in 2023, when shrinking revenues and accelerating inflation threatened the ability of governments at different levels to function effectively.

At the time, he said FX inflows had weakened significantly, while portfolio investment had largely dried up, with the unresolved $7 billion obligations continued to weigh heavily on the economy.

“These distortions, alongside petroleum subsidies, were costing the economy about six percent of GDP,” Abdullahi said.

He further explained that many companies had already deposited funds with the central bank for FX transactions, but the institution struggled to meet those obligations for up to 2 years, leading to a major loss of confidence among investors.

Abdullahi described the policy changes introduced after October 2023 as unavoidable measures aimed at stabilising the economy and rebuilding investor trust.

“We were really in a crisis situation,” he said. “If you had a choice, would you not take the right decisions, however painful they may be?”

He noted that the coexistence of multiple exchange rates and the fuel subsidy regime created widespread distortions, encouraging rent-seeking behaviour and weakening government revenues.

Under the previous arrangement, certain groups had privileged access to cheaper FX rates, allowing them to profit significantly by reselling the currency at higher market rates.

Mr Abdullahi also pointed to the sharp decline in key economic indicators before the reforms. Foreign direct investment had been falling steadily due to the multiple exchange rate system, while non-oil exports also collapsed.

He cited cocoa exports as an example, noting that earnings dropped from about $2 billion in 2015 to less than $300 million by 2018.

At the same time, the oil sector had been contracting for nearly 2 and a half years before the reforms were implemented. Despite the earlier challenges, Abdullahi said the reforms are beginning to deliver measurable improvements.

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He noted that inflation has been declining for 19 consecutive months, while food inflation has fallen to its lowest level in 13 years. According to him, portfolio investors now rank Nigeria as the top emerging market destination.

“Today we’re an economy that is inspiring confidence everywhere we go,” he said. The deputy governor also highlighted a rebound in non-oil exports, which generated around $6 billion in revenue last year. Authorities are now targeting $12 billion in the near future.

Mr Abdullahi acknowledged that social and economic challenges remain but insisted the reforms have placed the country on a stronger path toward long-term growth.

“We have moved away from the imbalances we inherited and are now on a firmer footing toward a more positive economic trajectory,” he said.