Nigeria Records $6.83 Billion Balance of Payments Surplus
Investment Research Weekly Market Commentary | Apr 14, 2025
Welcome to this week’s edition of our stock market newsletter!
Green White Green Recap
Nigeria Records $6.83 Billion Balance of Payments Surplus
For the first time in three years, Nigeria has recorded a balance of payments (BoP) surplus, which was $6.83 billion in 2024, according to the Central Bank of Nigeria (CBN). In simple terms, the surplus means that Nigeria earned more dollars from the rest of the world than it spent in 2024. This marks a major shift from the $3.3 billion+ deficits recorded in both 2022 and 2023.
It’s a notable shift that suggests Nigeria’s ongoing reforms, especially the removal of petrol subsidies and unification of the FX rate, are beginning to reflect in the country’s external accounts.
When a balance of payments surplus is recorded, it means the CBN is able to increase its external reserves for future use. In 2024, Nigeria’s external reserves rose to $33.2bn to $40.2bn.
This improvement can be attributed to lower imports, especially petroleum products, and increased foreign investment in debt and equity securities. While exports fell 5.1% to $53.0bn, imports sharply moderated by 16.7% to $39.8bn, bringing goods surplus to $13.2bn the highest in recent quarters and easing pressure on Nigeria’s current account balance.
There was also a strong performance in diaspora remittances, which increased to $20.93 billion, up nearly 9% from the previous year. Portfolio investments more than doubled, reaching $13.35 billion, while foreign direct investment (FDI) declined by 42.3% to $1.08 billion.
However, despite the improvements in 2024, challenges remain in 2025. The naira is under pressure due to lower oil prices and still weak investor appetite.
Key Takeaways:
Nigeria posted a $6.83 billion balance of payments surplus in 2024, its first since 2021, supporting FX reserves growth to $40.19 billion.
2025 is proving to be different as lower oil prices and weak foreign investment are putting pressure on the naira, with the reserves moderating to $38.0bn so far.
FX Update
Naira Faces Mixed Performance Amid Global Pressures and CBN Interventions
The Nigerian foreign exchange market has faced fresh volatility, largely due to President Trump's tariffs, which is expected to hurt the demand for oil, and increasing oil supply by OPEC, both of which have reduced oil prices by 14.8% to $64.7 per barrel in 2025.
On April 3, 2025, the naira weakened to ₦1,569 per dollar from ₦1,534 the previous day, reflecting a 2.3% depreciation and hitting its lowest point in 30 days. By April 9, the official rate had declined further to ₦1,620, with the average rate settling at ₦1,615. Despite broader market pressures, the parallel market showed relative resilience, with the dollar bought at ₦1,580 and sold at ₦1,605. This limited movement suggests some stability, especially when compared to the more significant fluctuations in the official market.
CBN’S Role:
In response to the volatility, the CBN has increased dollar supply through interventions in the official market, although these efforts have been partially offset by a reduction in reserves, reflecting the continued impact of lower oil-related inflows and cautious investor sentiment.
Key Takeaways:
Oil Prices Matter: Global risks like Trump’s tariffs affect Nigeria primarily through oil, its main source of FX earnings. Falling oil prices reduce exports, thereby weakening the naira.
The CBN continues to sell dollars to support exchange rate stability, although this is unlikely to be sustainable in the long term given the ongoing pressures from reduced oil-related exports and persistent investor caution.
Investor Strategy: In light of these risks, long-term investors may consider diversifying into dollar-denominated assets to preserve value.
Remember to save dollar-based goals in dollars, which can be done with apps like Ladda.
Equities Update
Nigerian Stocks See Modest Gains Amid Mixed Sector Performances
For the week ending April 10, 2025, the NGX All-Share Index (ASI) declined by 0.18%, closing at 105,511.89 points, slightly moderating year-to-date (YTD) gain to 2.53%.
The Banking sector saw a growth of 0.51%, bolstered by solid earnings from major banks like GTB, Zenith Bank, and Access Bank.
The Insurance sector rose by 1.70%, reflecting positive sentiment towards insurance stocks.
The Consumer Goods sector experienced a decline of 0.66%, indicating weaker performance compared to other sectors.
The Oil & Gas sector dropped by 0.19%, showing a slight retreat in oil-related stocks.
The Industrial Goods sector saw a marginal decline of 0.02%.
Key Takeaway:
Limited exposure to Nigerian stocks is recommended due to the weak economy and rising global risks.
Fixed Income Update
Treasury Bill Yields Mixed, Bond Market Stable
Short-term treasury yields rose at the latest auction, with the 91-day bill climbing to 18.00% from 17.00% and the 182-day bill increasing to 18.50% from 18.00%, reflecting tighter liquidity and demand for shorter tenors. The 364-day bill recorded strong demand, driving its stop rate down to 19.63% from 22.52%. Investors are locking in longer-term positions at lower yields due to limited high-yield alternatives and expectations of interest rate stability. While auction rates don’t always mirror market levels, current yields remain broadly aligned, with the drop in the one-year rate suggesting a possible peak in long-end rates. This drop signals that investors are locking into longer tenors now, anticipating a potential decline in future rates.
Meanwhile, the Nigerian benchmark bond market remained relatively stable, with average yields across maturities holding firm in the 18–19% range, reflecting a cautious but steady sentiment among fixed income investors.
Key Takeaways:
Short to medium-term treasury bill yields have risen following the latest CBN auction.
The longer-dated 364-day treasury bill continues to see strong investor interest with stable yields at the auction.
You can invest in treasury bills to save for your short-term goal on rent, schools, fees, etc. through Ladda—a fintech app that helps you save at high returns.
For long-term goals, naira-denominated fixed income instruments are not suitable due to inflation and currency risks .
Star-Spangled Banner Recap
Market Turmoil Amid Tariff Policy Shifts
On April 9, 2025, President Donald Trump announced a 90-day suspension of new tariffs for most countries, but made a key exception for China. This decision led to a significant escalation, with tariffs on Chinese imports jumping to 125%. Beijing swiftly retaliated by imposing an 84% tariff on US goods. Later in the week, the US offered tariff exemptions for some products, particularly in the technology sector. These tariffs generated uncertainty in financial markets and heightened worries about fragile global economic growth. China's 84% tariff on US goods mirrors the substantial 125% tariff increase the US imposed on Chinese imports.
These tariffs fuel uncertainty across financial markets and raise concerns about weak global economic growth.
Major Stock Markets Performance:
The US stock market experienced notable volatility over the past week. The Dow Jones Industrial Average (DJIA) ended April 4, 2025, down 5.5%, but saw a recovery of 1.6% by April 11, 2025. Over the week, the DJIA posted a net gain of 5.00%
Similarly, the S&P 500 also saw a steep decline of 6% on April 4, 2025, but rebounded with a 1.8% increase by April 11. For the week, the S&P 500 gained 5.7%.
The Nasdaq Composite followed a similar trend, dropping 5.8% on April 4, 2025, but recovering with a 2.1% rise by April 11. The Nasdaq finished the week up 7.3%.
Global Markets:
FTSE 100 (UK):
Performance: -0.5% for the week, +1.3% YTD
The UK market experienced a weekly loss, with year-to-date performance showing slight gains.
Nikkei 225 (Japan):
Performance: +0.6% for the week, +21.8% YTD
Japan's equity markets showed positive momentum, reflecting strong performance on a year-to-date basis.
CAC 40 (France):
Performance: -0.9% for the week, +5.2% YTD
France’s index showed some weakness for the week, although year-to-date gains remained strong.
Shanghai Composite (China):
Performance: +0.3% for the week, -1.2% YTD
China’s stock market showed minimal improvement for the week but still faced negative year-to-date performance.
Key Takeaways:
Escalating Trade Tensions: The abrupt changes in US tariff policies have intensified global trade concerns, leading to significant market volatility.
Investors should expect more volatility going forward given the uncertainty of US policies.
Remember to always save for your investment goals in dollars. You can do this with us on Ladda—a fintech app that helps you save at high returns. www.getladda.com
We hope you find this edition insightful, and as always, stay focused on your financial goals!
***
Do you know that we have our own podcast? It’s MONEYTALKS!💚
Here’s a link to listen to all the amazing episodes we have!
***
Do you have any questions? You can send an e-mail to info@themoneyafrica.com or send a DM to any of our social media channels.
***
MoneyAfrica premium plan
Are you a mid to high-income earner? Do you find communities a bit too busy? You should sign up for our premium plan.
You can learn more about that here
***
We often get questions regarding how to plan your finances to align with your relocation plans, especially for students seeking to further their studies. As always, we have heard you, and we have put together an e-book to help you navigate this. Follow this link, to get your FREE copy of the e-book: The Japa Encyclopedia.
***
Get our annual subscription and learn more about investing safely and building a solid portfolio in 2023.
Don’t forget to:
Join our community, if you want to smash your 2025 financial goals. It takes at least 30 days to build great habits that will last you a lifetime. So why not start now? There is a lot you can achieve.
Get a budget sheet to track your monthly expenses. Click here
Get an investment tracker to be on top of all your investments. Click here
MoneyAfrica is a financial literacy platform. Our goal is to make everyone better with their finances.
We do this by engagements via our:
- social media handles
- platforms for paid community members (for adults and students)
- webinar sessions with corporate clients
Would you like to join any of the communities? Please click here
Would you like us to hold a webinar for your company's staff? Please send an email to info@themoneyafrica.com
