Dele Akintola, Chief Investment Officer, CIO of Alerzo, has provided a broader perspective on Nigeria’s current account outlook, citing key macroeconomic factors that are driving the country towards a potential trade surplus in 2025.
He made this known while speaking during a discussion on Drinks and Mics, a podcast hosted by Ugo Obi-Chukwu, CEO of Nairametrics, on Friday.
Watch full analysis here:
“I think we will still have a current account surplus this year, largely on the back of the fact that we are not importing as much fuel as we used to. The amount of imports into the country has also reduced,” Akintola stated.
He further noted that with the local refinery now having the capacity to export, the country may be on the path of trade surplus during the year.
He said “Dangote Refinery is also exporting. So, those numbers look good.”
According to the recently released data from the National Bureau of Statistics (NBS), Nigeria recorded a trade surplus of $21.1 billion in 2024.
Analysts express concerns over Chinese trade in Nigeria
Arnold Dublin Green, CEO of Cordros Capital has raised concerns over the effectiveness of China’s trade agreements with Nigeria, particularly the much-debated currency swap deal.
- The expert argues that while the agreement was initially seen as a means to stabilize the naira, it has not yielded the intended benefits due to its limited scale.
- He noted that China’s dominance in Nigeria’s trade data stood out significantly.
- He explained that the currency swap deal, which was initially introduced as a mechanism to support naira stability, has had limited effectiveness due to its relatively small size compared to the volume of trade between both countries.
“What stood out for me on the trade data is China. China is our biggest trade partner. This China swap thing—I’m not sure how controversial this is,” Green said.
“I’ve been thinking about naira stability and this China swap deal, which was supposedly a way to stabilize the naira. I think it hasn’t quite worked because the size of the swap is quite small [$2.5 billion] compared to the $20 billion trade volume.”
He further highlighted that when the swap deal was first introduced, his initial thoughts were that China’s main objective was to reduce its dependence on the US dollar rather than necessarily benefiting Nigeria.
“We did the same with South Africa, we did the same with Egypt, and we even talked about the Kenyan panda bond. The entire trade of China is just a swap,” he added.
Renewal of the Nigeria-China Currency Swap Agreement
In December 2024, China and Nigeria renewed their $2 billion currency-swap agreement. The arrangement, first initiated in 2018, was designed to facilitate trade and investment between the two nations while reducing reliance on the US dollar.
While the agreement allows Nigerian businesses to conduct transactions with their Chinese counterparts using the yuan instead of the US dollar, analysts argue that its effectiveness remains limited due to the relatively small size of the swap compared to Nigeria’s overall trade volume with China. Despite these challenges, China’s role in Nigeria’s economy continues to expand, reinforcing its position as the country’s largest trading partner.
More insights
Nairametrics reports that China emerged as Nigeria’s largest source of imports, accounting for N14.14 trillion of Nigeria’s imports in 2024 according to the latest trade report from the National Bureau of Statistics (NBS) for 2024.
The bulk of these imports include electronics, machinery, textiles, and industrial equipment, which play a crucial role in Nigeria’s manufacturing and technology sectors. India’s contributions to Nigeria’s import profile remain significant, particularly in pharmaceuticals, industrial raw materials, and processed food products.
