CBN Strengthens Economic Buffers As Oil Prices Fall, Pushes FX Inflows & Local Production

AS global oil prices continue to slide, now hovering around $64 per barrel, Nigeria’s economy faces mounting pressure due to its heavy dependence on crude exports. The Central Bank of Nigeria (CBN), under the leadership of Governor Olayemi Cardoso, has proactively introduced a series of measures aimed at cushioning the economy, maintaining macroeconomic stability, and boosting foreign exchange inflows.

The Wall Street Journal recently projected that Brent crude could fall below $50 per barrel by the end of 2025, underscoring the urgency for strategic interventions. Nigeria’s 2025 budget assumed oil production of two million barrels per day at $75 per barrel. With prices now below this benchmark, revenue shortfalls could push the fiscal deficit to between 6–7% of GDP, raising the risk of inflationary pressures and weakened economic stability.

To counter these challenges, the CBN has emphasized strengthening non-oil export potential, enhancing backward integration to reduce reliance on imports, and optimizing Diaspora Dollar remittances to support foreign exchange inflows. Drawing inspiration from China’s export-led growth strategy, Cardoso stressed the importance of a competitive Naira as a driver for economic growth.

Businesses are being urged to adopt export-oriented strategies targeting sectors like agriculture, manufacturing, and creative industries. This includes shifting from exporting raw materials to processed goods, a move that could significantly increase foreign exchange earnings. Highlighting the potential of Nigeria’s creative sector, Cardoso noted that music, film, crafts, and digital exports could attract up to $25 billion annually if fully leveraged.

The telecommunications sector has also been called upon to embrace backward integration. Cardoso specifically encouraged telecom companies to locally produce key inputs such as SIM cards, cables, and towers to reduce pressure on the Dollar and strengthen the domestic economy. The recent visit by Airtel Africa’s CEO Sunil Taldar to the CBN reflected strong industry support for these initiatives, with commitments to expand financial inclusion and local production.

Economic reforms instituted by the CBN have also enhanced macroeconomic resilience. Speaking at the sidelines of the IMF/World Bank Annual Meetings in Washington DC, Cardoso highlighted steps taken to stabilize the foreign exchange market, strengthen the Naira, and attract investor confidence. The Federal Government plans to issue $2.3 billion in Eurobonds to refinance maturing debt, further supporting economic stability.

The CBN’s efforts have yielded notable results. Inflation has shown signs of easing, with targets around 18.02%, while gross foreign reserves hit a five-year high of $43.4 billion, sufficient for 11 months of import cover. Positive trade balances, increased FDI prospects, and improved financial market liquidity signal that Nigeria is gradually building a resilient economy capable of withstanding external shocks. Average monthly foreign exchange turnover has risen to $8.6 billion in 2025, up from $5.5 billion in previous years, demonstrating improved market depth and transparency.

Cardoso emphasized that the economy’s current stability stems from a strategic restructuring focused on domestic production and import substitution. By encouraging local manufacturing and discouraging excessive imports, Nigeria has created stronger buffers against global uncertainties. Trade tariffs, he noted, have had minimal impact, primarily affecting oil, while other sectors continue to benefit from domestic reforms.

Deputy Governor for Economic Policy, Mohammed Sadi Abdullahi, added that measures to prevent speculative activity and enforce best practices have strengthened capital flows and external positions. These interventions have created deeper, more functional financial markets, supporting sustained economic growth.

Looking ahead, Cardoso remains confident that Nigeria’s competitive currency, positive trade balances, and growing non-oil sectors will position the economy for long-term resilience. He emphasized that the combination of structural reforms, fiscal prudence, and strategic investments has created a solid foundation to navigate ongoing global challenges, ensuring Nigeria remains economically robust despite oil price volatility.

In sum, the CBN’s proactive measures—ranging from export promotion and backward integration to financial stabilization—signal a comprehensive approach to strengthening economic buffers, fostering FX inflows, and reducing vulnerability to global oil price shocks, charting a course for sustainable economic development.