Figures released by the National Bureau of Statistics (NBS) and the Central Bank of Nigeria (CBN), suggest that Nigeria’s economy is on the path of positive growth, reaching a 3.84 percentage points. But with foreign reserve declining by $2.3 billion from $40.88 billion in January 2025 to $38.58 as of February 2025, as well as a marginal trade surplus of N3.423 billion, the economy may still face an uphill task in reaching anticipated robust levels
Nigeria’s economy recorded a year-on-year growth of 3.84 percent in the fourth quarter (Q4) 2024, marking the fastest expansion in three years as reported by the National Bureau of Statistics (NBS). This growth was primarily driven by the services sector, which grew by 5.37 percent and accounted for 57.38 percent of the country’s total Gross Domestic Product (GDP).
The agricultural sector, which reported a 2.10 percent growth in Q4 2023, expanded by 1.76 percent in Q4 2024, while both the agricultural and services sectors recorded positive growth, the industrial sector experienced a 1.86 percent decline, falling from 3.86 percent in Q4 2023 to 2.00 percent in Q4 2024.
Despite this, Nigeria’s full-year GDP growth for 2024 stood at 3.40 percent, reflecting a significant improvement from 2.74 percent in 2023. The sustained expansion in the services sector highlights the structural transformation of Nigeria’s economy, as non-oil sectors continue to play a dominant role in overall economic performance.
The Centre for the Study of the Economies of Africa (CSEA), however, expressed concern that while the growth momentum is encouraging, the country still faces several macroeconomic challenges, including high inflation, exchange rate volatility and infrastructure deficits, which have affected the manufacturing sector and this could hinder long-term economic stability.
To sustain and accelerate economic growth, CSEA urged the Federal Government to implement policies that enhance productivity in key non-oil sectors, such as technology, financial services, and manufacturing. Additionally, targeted interventions in infrastructure development and economic diversification will be crucial in strengthening the resilience of the economy and ensuring sustainable long-term growth.
Foreign Reserves Decline By $2.3b
Also, a report by the Central Bank of Nigeria (CBN) indicates that the country’s gross foreign reserves declined to $38.58 billion as of February 24, 2025, from $40.88 billion in January 2, 2025, representing a 5.63 percent depletion within a short period.
The decline is primarily attributed to external debt servicing obligations and sustained interventions in the foreign exchange (FX) market aimed at stabilizing the naira. Furthermore, the continued drawdown on reserves reflects the pressures facing Nigeria’s external sector, including lower foreign exchange inflows from crude oil exports and capital repatriation by foreign investors.
With external reserves serving as a buffer for exchange rate stability and economic resilience, a persistent decline could further weaken Nigeria’s ability to defend the naira against volatility in the FX market.
The CSEA expressed reservations that the dwindling reserves pose a risk to macroeconomic stability, capable of limiting the government’s ability to meet external obligations, finance imports and maintain investor confidence.
It said policy measures must be implemented to boost FX inflows, including attracting foreign direct investment (FDI), enhancing non-oil export earnings, and improving the overall business climate to encourage capital retention in the economy.
Trade Surplus Hits N3.423b In Q4 2024
In a related development, the NBS reports that Nigeria’s total merchandise trade reached ₦36,604.83 billion in Q4 2024, representing a 68.3 percent increase from the ₦21,747.40 billion recorded in Q4 2023 and a 2.20 percent rise from Q3 2024.
Exports, which accounted for 54.68 percent of total trade, stood at ₦20,014.33 billion, reflecting a 57.67 percent increase from Q4 2023, but a 2.55 percent decline compared to the ₦20,537.17 billion recorded in Q3 2024. Meanwhile, imports in Q4 2024 amounted to ₦16,590.51 billion, making up 45.32 percent of total trade.
This represented an 8.57 percent increase from Q3 2024 and an 83.24 percent surge compared to Q4 2023. The trade surplus for the quarter stood at ₦3,423.82 billion. Despite this positive trajectory, Nigeria’s trade remains heavily reliant on crude oil exports.
In Q4 2024, crude oil exports contributed approximately 68.87% (₦13.78 trillion) of total exports, while non-crude oil exports accounted for 31.13% (₦6.23 trillion). The continued dominance of crude oil in Nigeria’s trade structure poses significant economic risks, as it makes the economy vulnerable to global oil price fluctuations and external shocks.
The non-oil export sector faces challenges such as low competitiveness, infrastructure deficits, and limited market access. To enhance and sustain Nigeria’s trade position, economic diversification is essential.
The Centre for the Study of the Economies of Africa recommends strengthening of local manufacturing, improving infrastructure, and reducing trade bottlenecks as crucial policy steps that could help build a more resilient and balanced trade economy in the long run.
