The Central Bank of Nigeria has announced a dramatic recovery in the country’s foreign exchange reserves, with net reserves climbing to $23.11 billion in 2024 – the highest level since 2021. This financial turnaround comes as the Lagos business community warns that without fundamental reforms to Nigeria’s power sector and debt management, these gains may prove temporary.
Governor Olayemi Cardoso revealed the figures on Tuesday, highlighting a remarkable improvement from the $3.99 billion recorded in 2023. “This recovery reflects our deliberate policy choices to rebuild confidence and reduce vulnerabilities,” Cardoso stated, pointing to cleared foreign exchange liabilities and improved non-oil inflows as key drivers. The gross reserves position also strengthened significantly to $40.19 billion.
However, the Lagos Chamber of Commerce and Industry (LCCI) quickly tempered optimism about the reserves rebound. Director General Dr. Chinyere Almona cautioned that Nigeria’s underlying economic weaknesses – particularly chronic power shortages and mounting debt – threaten to undermine these gains. “While we welcome improved liquidity, businesses need reliable electricity more than temporary forex stability,” Almona emphasized.
The business group’s concerns center on Nigeria’s recent approval of a $500 million World Bank loan intended to support vulnerable households and small businesses. With Nigeria’s debt to the World Bank already standing at $17.32 billion and a dismal 16% disbursement rate of previously approved loans, the LCCI questioned whether new borrowing would address root causes of economic stagnation.
Economists note the paradox of Nigeria’s situation: while foreign reserves recover, businesses still grapple with daily power outages that cost the economy an estimated $29 billion annually. The manufacturing sector continues to bleed jobs as factories struggle with exorbitant diesel costs to power generators. Meanwhile, debt servicing consumed 98% of government revenue last year, leaving little for critical infrastructure investment.
As the CBN projects further reserve growth in 2025, boosted by anticipated increases in oil production and non-oil exports, the fundamental question remains whether Nigeria will use this breathing room to implement the structural reforms needed for lasting economic transformation – or simply postpone dealing with its most debilitating challenges.
The path forward, analysts suggest, requires moving beyond short-term financial engineering to tackle the power crisis, improve tax collection, and create an environment where businesses can thrive without constant government intervention. Without these changes, even the most impressive reserve figures may prove to be just another temporary peak in Nigeria’s rollercoaster economic journey.
