Global oil prices have dropped significantly, now hovering just above $64 per barrel. For an oil-dependent economy like Nigeria, this continued decline in crude prices presents a serious concern rather than a relief. The Wall Street Journal’s grim forecast that Brent crude could fall below $50 per barrel by the end of 2025 only deepens the urgency for strategic policy responses. To strengthen economic buffers and sustain FX inflows, the Olayemi Cardoso-led Central Bank of Nigeria (CBN) has proactively initiated strong measures aimed at cushioning the domestic economy against the looming oil price shock and ensuring sustainable economic development. Precious Ugwuzor reports
The politics and talks around global oil prices always ignite significant worry on Nigeria and her revenues.
Already, Brent futures eased by 0.71 per cent to $64.47pb as U.S.-China trade truce excluded energy discussions, keeping the supply outlook uncertain.
Nigeria’s 2025 budget is squeezed by assumption of oil production of two million barrels per day and an oil price of $75 a barrel.
At a benchmark of $75 per barrel and a production capacity of two million barrels per day (mbpd), Nigeria’s oil revenues would fall given the present oil price which is below budget benchmark. Such a shortfall could push the fiscal deficit to between six and seven percent of Gross Domestic Product (GDP), potentially fueling inflationary pressures and weakening macroeconomic stability.
However, the CBN under the leadership of Olayemi Cardoso, has proactively initiated measures aimed at cushioning the domestic economy against the looming oil price shock.
Among these are policies to boost Nigeria’s non-oil export potential, strengthen backward integration to reduce dependence on imported goods, and streamline diaspora dollar remittances to enhance foreign exchange inflows.
Drawing from China’s economic strategy, the apex bank said Nigeria’s competitive exchange rate can drive export-led growth.
To harness this potential, businesses are expected to adopt export-oriented strategies by targeting sectors with strong export potential such as agriculture, manufacturing and creative industries; implement import-substitution models by strengthening domestic production capabilities and reducing reliance on costly imports; and focus on value addition by shifting from exporting raw materials to processed goods, thereby boosting foreign exchange earnings.
Cardoso said Nigeria’s creative sector has potential to attract $25 billion annually to the economy, highlighting the untapped opportunities in Nigeria’s expanding creative sector, including music, film, crafts and digital exports. He urged businesses to explore international markets, digital platforms, and global tours to increase dollar revenue inflows.
The CBN boss also recently advised telecom companies to reduce their dependence on foreign imports by producing key components of their inputs locally. The backward integration proposal for the telecom industry comes at a time the real sector is in dire need of sustainable growth. The CBN boss gave insights on what the economy stands to gain from backward integration in the telecoms sector.
Discouraging foreign services import
Speaking in Abuja during a visit by the Airtel Africa management team led by Group CEO Sunil Taldar, the CBN Governor underscored the importance of boosting local production to ease pressure on the dollar, generate employment and strengthen the national economy.
He emphasised the urgent need to domestically manufacture key telecom inputs—such as SIM cards, cables, and towers—that are currently being imported in large volumes.
Cardoso highlighted that over the past 16 months, the CBN has taken deliberate steps to stabilize the foreign exchange market, strengthen the naira, and attract investor confidence. With these foundations now in place, he urged telecommunications companies to embrace backward integration as a strategic imperative.
In response, Airtel Africa CEO Sunil Taldar commended the CBN’s reform efforts and voiced strong support for local production, noting that such a shift would ultimately yield long-term benefits for the telecommunications industry. He also reaffirmed Airtel’s commitment to expanding financial inclusion across Nigeria through innovative technology solutions.
Research Head, Cowry Asset Management Limited, Charles Abuede, said the CBN governor’s call was to discourage the importation of foreign services into Nigeria, especially when efforts can be made to develop such services locally. “The high demand for foreign exchange by telecom operators has further pressured the naira due to increased demand for the dollar. However, with adequate infrastructure development and a conducive operating environment facilitated by regulators, these challenges can be mitigated,” he said.
According to Abuede, “given Nigeria’s FX policies, illiquidity in the foreign exchange market and infrastructure deficits, I think increased investment in the telecom sector would enable operators to embrace backward integration. This would allow them to manufacture key components, such as SIM cards, locally. As a result, production costs could decline—provided the operating environment remains stable. This will improve profit margins and enhance both top-line and bottom-line growth in the long run.”
Creating economic buffers amidst reforms
Economic reforms instituted by the CBN have removed distortions and laid foundation for economic development, Cardoso has said.
Speaking yesterday at the investors’ forum held at the sidelines of the ongoing IMF/World Bank Annual Meetings in Washington DC he said that bold and comprehensive reforms have led to greater macroeconomic resiliency and positive economic outcomes.
The investors forum attended by JP Morgan and other stakeholders is meant to attract global investors to the domestic economy.
He said the Federal Government will also issue about $2.3 billion Eurobond, which will also help refinance the $1.18 billion Eurobond maturing in November.
He said the event provides a valuable opportunity to engage directly with our partners and investors who continue to show confidence in Nigeria’s future.
Cardoso said the apex bank remain committed to prudent policy that would bring about durability, ensuring a lasting and positive impact in the economy.
He said about four per cent growth target is being targeted, even as government is pushing through expansion of the non-oil sector growth.
He said that inflation has continued to drop, with 18.02 per cent target in the nearest term.
He said that gross foreign reserves have hit five-year high at $43.4 billion, with capacity to provide 11-month import cover for the country.
He said that Nigeria currently enjoys positive balance of payment, contributing positively in easing economic stability.
He said difficult economic reforms embarked on by the Federal Government is bearing positive results as seen the stability in exchange rate, stronger economic buffers, and dip in inflation numbers.
Cardoso explained that apex bank has been able to build a stronger economy, through difficult things we have done.
He said that Nigeria has a competitive naira, which is game changer that should attract investors to the economy. He said that with a competitive naira, FDIs inflows prospects to the economy has risen.
Deputy Governor, Economic Policy at the CBN, Mr. Mohammed Sadi Abdullahi, said the apex bank has taken a lot on measures to prevent speculative activity and ensure best practices in the market operational framework.
“Capital flows, which I mentioned, within the 2019–2020 period before, collapsed by over 75 per cent, have significantly improved and have therefore improved our external position. So, we do now have deeper and functional financial markets, much more robust and transparent. There’s been a significant increase in the average monthly turnover to $8.6 billion monthly in 2025 versus an average of $5.5 billion and much less in the year before. Today, CBN stands as a net supplier by less than about a percentage of the market turnover. We’re actually a net buyer in the market,” he said.
Building resilient economy
Nigeria’s economy has been fully restructured and is now resilient, with huge buffers against global risks, Cardoso told global investors at the annual meetings.
Cardoso, who is the leader of the Nigeria delegation at the meetings, said the naira, has equally emerged as a competitive currency, with the economy witnessing positive trade balances and large businesses moving from imports to export of locally produced goods and commodities.
According to him, the positive economic indicators have combined to create resilient and strong buffers, keeping the economy in great shapes.
Speaking on the impact of the trade tariffs on the domestic economy, the CBN boss, said the tariffs are less of problems for the country.
“And for us again, oil is basically the only commodity that was so exposed to the tariffs, and the impact of that was relatively modest. We now have a more competitive currency with the results that, for once, we have a situation where we have a positive balance of trade surplus, and we expect it to be six per cent in GDP for some time,” he said.
“So basically, what is happening is a complete restructuring of the economy, where we are encouraging people to go into domestic production, and, of course, discouraging imports,” he added.
“And I think we were very fortunate, because a lot of the things that were needed to have been done, we did them much earlier, and as a result of that, we’re able to create resilience and buffers against potential shocks,” he stated.
Cardoso explained that oil was the oil commodity that was exposed to the trade tariffs, but the impact was equally modest.
“So, and of course, in terms of anchoring expectations, we found that those who followed the Nigerian economy were fairly comfortable. And for us, again, oil is basically the only commodity that was so exposed, and the impact of that was relatively modest,” he said.
He said the G-24 has played significant role in finding solutions to global challenges, through dialogue and exchange of ideas with global financial institutions.
He said although global growth has been slow, but not as behind as would have been expected to be.
In his remarks, G-24 Chairman, Pablo Quirno noted that recent adverse shocks in global economy have left growth below pre-pandemic levels, with rising policy uncertainties creating substantial medium-term headwinds.
“Emerging market and developing economies have faced deteriorating terms of trade, reduced export volumes, and declining foreign currency earnings. Many of these countries have implemented domestic policies to mitigate uncertainty, but constrained policy space underscores the urgent need for collective solutions supported by multilateral institutions,” he said.
Global oil politics
Oil prices may face further declines if OPEC+ decides to raise output at its November 2025 meeting. The alliance is expected to focus on reviving another sliver of production in December in a move that may amplify traders’ concerns about a global glut.
Already, traders are keeping a close eye on next moves by India and China, top buyers of Moscow’s supplies, for clues on impacts to global balances.
US President Donald Trump said China would buy more US energy as part of a wider trade truce but investors are still waiting to see signs that the purchases will materialize. China last imported US crude oil in May and liquefied natural gas in February, according to Customs data.
The group is likely to boost output quotas by a modest 137,000 barrels a day for December, RBC Capital Markets LLC said in a note.
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