Offshore Investors Exit Drag Nigeria’s Balance of Payment in Q1
The Nigerian economy was impacted by a large-scale outflow of funds in the first quarter of the year, reflecting sharp risk-off sentiment that followed the US tariff threats. The financial market witnessed sharp outflows of funds from local debt and equities markets as offshore investors sought safe haven assets due to uncertainties.
The global trade dislocation triggered by the US resulted in huge capital flight that threatened the naira value in Q1. Offshore investors’ demand for forex spiked, forcing aggressive FX intervention from the Central Bank to keep the naira stable.
The uncertainties in the economy also supported the large-scale outflow, while personal remittances from Nigerians abroad dropped sharply.
In a report, the Central Bank of Nigeria’s provisional Balance of Payments (BoP) statistics for Q1 2025 show that Nigeria recorded a current account surplus of $3.73 billion. While this marked a slight decline from the $3.80 billion recorded in Q4 2024, it was marginally higher than the $3.69 billion posted in the same period of the previous year, Cowry Asset Limited said in its commentary note.
Analysts highlighted that the surplus was underpinned by improvements in key areas of the current account, particularly the goods account, which rose significantly from $2.62 billion in Q4 2024 to $4.16 billion in Q1 2025.
The gain was largely attributed to a rise in export earnings and a moderation in imports. Further details revealed that the country’s export receipts grew by 9.79% to $13.91 billion during the quarter, helped by higher oil and gas volumes as well as improved non-oil exports.
However, the depreciation of the naira also played a role, making Nigerian goods more competitive in the international market, Cowry Asset Limited said. On the import side, total imports declined to $9.75 billion from $10.05 billion in the previous quarter, reflecting reduced demand for petroleum products and other non-oil goods.
Within exports, analysts noted that gas exports were particularly strong, increasing from $2.10 billion to $2.66 billion, representing a 26.7% quarter-on-quarter growth. Analysts noted that non-oil and electricity exports also performed well, rising by 30.39% to $2.66 billion compared to $2.04 billion in Q4 2024.
Reflecting the effect of a weak local currency, non-oil imports fell from $7.37 billion to $6.77 billion, further supporting the current account position. The secondary income account also remained in surplus at $5.29 billion, though this represented a 17.86% decline from the previous quarter.
However, other components of the current account showed mixed trends, analysts said. Net outpayments in the services account increased slightly to $3.69 billion, up from $3.48 billion in Q4, driven by higher spending on travel and business services.
Financial services receipts were also weaker in the period. In the primary income account, the debit balance widened by 13.48% to $2.02 billion, reflecting higher interest payments to foreign investors.
Personal remittances from Nigerians abroad slowed to $4.93 billion from $5.08 billion, and inflows from foreign aid and grants declined. Analysts at Cowry Asset Limited hinted that this is likely influenced by recent foreign policy shifts, including an executive order signed by the U.S. President.
On the financial account, a balance of $7.58 billion was recorded, slightly lower than the $7.82 billion in Q4 2024. The headline figure masked significant shifts beneath the surface. Portfolio investment activity fell sharply, with a reversal of $5.03 billion recorded—indicating strong capital flight or repositioning by foreign investors.
Direct investment inflows also weakened slightly to $0.25 billion, down from $0.31 billion in the previous quarter. In the other investment category, there was a net reversal amounting to $4.32 billion.
Within this, outflows in other investment assets stood at $1.31 billion, compared to an inflow of $1.54 billion previously. Direct and portfolio investment assets by Nigerians abroad reversed by $0.55 billion, while portfolio assets alone saw an outflow of $0.48 billion.
These movements were influenced by several factors, including large-scale divestments by non-resident investors from CBN instruments, substantial government repayments on external debt, and a notable drop in foreign liabilities held by deposit money banks.
Meanwhile, net errors and omissions stood at $3.85 billion in Q1 2025, slightly down from $4.02 billion in the preceding quarter. The overall balance of payments, however, ended in a deficit of $2.77 billion for the quarter.
This contributed to a drawdown in the country’s external reserves, which fell from $40.19 billion at the end of December 2024 to $37.82 billion by the end of March 2025.
“Nigeria’s Q1 2025 current account surplus reflects resilient export performance, helped by stronger oil and non-oil earnings and weaker import demand.
“However, rising capital reversals and a wider financial account deficit signal persistent investor caution. The overall balance of pay deficit and falling reserves suggest external pressures remain a key concern”, Cowry Asset Limited stated. CBN Cuts Treasury Bills Rates, Rejects N1.07trn Excess Bids
