The Central Bank of Nigeria (CBN), has revealed in its Fourth Quarter 2024 Economic Report, released on Monday, that the country’s net foreign exchange (FX) inflow surged to an impressive $17.39 billion in Q4 2024.
This upswing, driven by a flood of autonomous sources like foreign investments, remittances, and export earnings, signals a bolstered forex market—a critical buoy for an economy grappling with the decline of its once-dominant oil revenues. Against this backdrop, Nigeria has increasingly leaned on its diaspora’s remittances to shore up its foreign reserves, a shift that’s proving vital as oil’s revenue tanks.
According to the CBN’s data, total FX inflows climbed 20.62% to $27.81 billion in Q4 2024, up from $23.06 billion in Q3, propelled by a remarkable 47.55% leap in autonomous inflows—from $11.03 billion to $16.27 billion. These funds, flowing from private channels rather than official coffers, include a potent mix of diaspora remittances, foreign portfolio investments, and non-oil export proceeds.
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Meanwhile, inflows through the CBN itself dipped slightly, falling 4.05% to $11.54 billion from $12.03 billion, a decline hinting at softer official receipts—perhaps from reduced foreign direct investment (FDI), grants, or government-channeled remittances. Despite this, the net inflow rose 14.99% to $17.39 billion from $15.13 billion, with autonomous sources delivering a hefty $14.84 billion (up from $10.40 billion) and the CBN contributing a more modest $2.56 billion (down from $4.72 billion in Q3).
This forex surge comes as Nigeria grapples with an economic downturn that has seen FX reserves depreciate significantly. For decades, crude oil has been the bedrock of its FX earnings, fueling reserves and stabilizing the naira. But declining oil revenues—masterminded largely by low oil output, insecurity, vandalism, and theft—have exposed the fragility of this reliance. In response, the government has doubled down on diversifying its FX streams, with diaspora remittances being prioritized.
The CBN reported a staggering 130% surge in remittance inflows to $553 million by July 2024, a figure that underscores the growing heft of Nigeria’s 15-million-strong diaspora.
In November 2024, Finance Minister Wale Edun announced a $2.35 billion net inflow into CBN reserves, crediting it with steadying the naira amid market turbulence.
“This boost to reserves is a game-changer,” Edun said, pointing to improved liquidity and a narrowing gap between official and parallel exchange rates.
Posts on X from analysts echo this optimism, with many linking the naira’s relative calm in late 2024 to these inflows. Yet, the Forex story tells of a troubled economy. Outflows spiked 31.37% to $10.42 billion in Q4 from Q3 levels, driven by a 22.98% rise in CBN outflows to $8.99 billion and a jaw-dropping 129.59% jump in autonomous outflows to $1.43 billion. These exits—likely tied to import payments, debt servicing, and capital repatriation—highlight the pressure on Nigeria’s FX gains. Still, the net inflow of $17.39 billion offers breathing room, a buffer against the outflows that once drained reserves dry.
Oil, though waning, hasn’t bowed out entirely. The federal government’s push to ramp up crude production hit its mark in 2024, achieving a target of 2 million barrels per day (bpd).
“Oil remains our fiscal anchor,” Edun reiterated, framing it as a backstop for revenue shortfalls.
This milestone, paired with rising non-oil exports, has kept export earnings in the autonomous inflow mix. But it’s remittances that steal the spotlight, their 130% growth by mid-2024 signaling a shift in Nigeria’s FX playbook.
Policies like the Electronic Foreign Exchange Matching System (EFEMS), introduced for FX transactions in the Nigerian Foreign Exchange Market (NFEM), and designed to match buy and sell orders automatically, have also curtailed volatility in the market.
However, economists have warned that reliance on external inflows will never boost Nigeria’s foreign reserves to stabilize the FX market,