February 5, 2024/FBNQuest Research

The CBN’s most recent edition of the Quarterly Statistical Bulletin (QSB) shows that the total value of foreign exchange (fx) into the economy decreased slightly by -1% q/q and -3% y/y to USD16.5bn in Q3 ’23. Except for brief increases in both Q2 ‘22 and Q4 ‘22, the q/q trend of fx inflow into the Nigerian economy has maintained a downward trend since Q4 ’21, reflective of the challenge being faced by the monetary authorities in attracting foreign inflows into the economy.

Regarding the composition of total fx inflow, autonomous sources still accounted for the bulk (c.61%) of aggregate fx inflow. However, its value decreased by -9% q/q to USD10.1bn.

Conversely, fx inflows through the CBN, which accounted for about c.39% of total fx inflow, increased by +18% q/q to USD6.4bn.

The data shows that the total outbound flow of fx (outflow) from the Nigerian economy increased by +10% q/q to USD82.bn during the quarter.

Fx outflow through the CBN increased by +13% q/q to USD7.2bn, accounting for about 83% of total fx outflows.

The fx outflow from the CBN are used to settle external debt and fund transfers to third parties on behalf of government departments, agencies, and ministries.

The combination of total fx flows (inflow and outflow) through the CBN resulted in a net outflow of USD823.0m. The net outflow position indicates the heightened demand pressure on Nigeria’s gross official reserve.

The balance of USD955.3m can be traced to fx outflow from autonomous sources. Taken together, autonomous fx flows through the economy resulted in a net inflow of USD9.1bn.  

On a cumulative basis, total fx inflow into the Nigerian economy decreased by -8% y/y to USD50.2bn in 9M ’23, while total fx outflow fell by -20% y/y to USD25.5bn. This implies a net fx inflow of USD24.8bn over the 9M ’23 period, higher than the USD22.9bn recorded over the corresponding 9M ’22 period.