$40bn reserves and the silence on who pays

CBN boasts of reserve recovery from $3bn to $40bn, but for the average Nigerian, the victory remains abstract.

The Central Bank of Nigeria has announced that net foreign exchange reserves have climbed from roughly $3 billion to $40 billion since the current administration’s economic reforms began. Gross reserves now stand at about $52 billion. This is the kind of number that makes finance ministers smile, and press releases write themselves. But the last time Nigerians heard triumphant reserve figures, they were also told the country had “turned the corner” — right before the 2016 recession arrived. This recovery mirrors the post-2005 Paris Club debt relief glow, except now there is no oil windfall to cushion the landing.

Governor Olayemi Cardoso, speaking at the BusinessDay CEO Forum in Lagos, framed the reserve recovery as evidence that the reforms are working. “When we started, the net exchange reserves figure was in the region of about $3 billion-plus,” he said, referencing the J.P. Morgan report that had caused panic. “We’ve achieved that hard-earned stability, and with stability comes potential for investment, and with investment comes growth”. The logic is sound. The question is whether the logic travels from the conference hall in Lagos to the market stall in Kano.

Cardoso also signalled that the Monetary Policy Committee, meeting next week on 20-21 July, remains in no rush to cut rates despite 11 months of continuous disinflation. Geopolitical shocks, including conflict involving Iran, have complicated the outlook. “We didn’t cut, and believe me, we saw things that most other people didn’t see,” he said. This is the central banker’s version of “trust me” — and trust, in Nigeria’s financial markets, has been in short supply since the currency crises of 2016 and 2020. The CBN’s caution echoes the Babangida-era structural adjustment programmes, where macroeconomic stabilisation was pursued at the expense of popular welfare.

Here is where the analysis must turn uncomfortable. A $40 billion net reserve position is an impressive technical achievement. But technical achievements do not buy maize in Maiduguri or pay school fees in Enugu. The winners from this recovery are clear: foreign portfolio investors who can now trade with greater confidence, the banking sector that benefits from a more stable naira, and the political class that can point to macroeconomic indicators as proof of competence.

The losers are less visible but more numerous. Small businesses still struggle to access foreign exchange at official rates. Manufacturers who need imported raw materials continue to navigate a parallel market where the naira trades at 1,425 to the dollar, compared to 1,383 on the official market. The Dangote Refinery’s decision to price local fuel sales in dollars has only increased demand for hard currency. For a trader in Lagos, the difference between 1,383 and 1,425 is not an abstract spread — it is the margin between profit and loss. For a minimum-wage earner, it is the difference between three meals and two.

The historical precedent is instructive. In 2005, Nigeria secured debt relief after years of negotiations, and reserves surged. The relief was real, but the structural problems — a mono-economy dependent on oil, weak institutions, and inadequate infrastructure — remained. Within a decade, the country was back in crisis. The current reserve recovery is built on reforms that have addressed some distortions in the FX market, but it has not addressed the underlying reality: Nigeria still earns most of its foreign exchange from selling crude oil, and oil prices remain volatile. The global chocolate economy is valued at over $130 billion, yet Nigeria still exports raw beans while importing finished chocolate. That is the structural problem that reserves alone cannot fix.

Cardoso urged Nigerian business leaders to “take advantage of the improved macroeconomic stability”. But stability, as he himself acknowledged, is not an end in itself. It is a foundation. The question is what gets built on that foundation. If the answer is more of the same — more imports, more raw material exports, more dependence on oil — then the reserve recovery will prove as fleeting as the last one. If, however, the stability enables the kind of industrial transformation that President Tinubu has promised in the cocoa sector, then there is reason for cautious optimism.

Winners: Foreign portfolio investors, the banking sector, the political class.

Losers: Small businesses, manufacturers reliant on imports, minimum-wage earners, and anyone who transacts in the parallel market.

Bottom Line: A $40bn reserve figure is a signal of stability, not a guarantee of prosperity. The real test is whether the CBN can convert this stability into something that reaches the pockets of ordinary Nigerians.