Against the backdrop of falling oil prices and a stubborn inflationary cycle, Nigeria’s foreign exchange market is undergoing a quiet but profound transformation.

The Central Bank of Nigeria (CBN), once the overwhelming force behind currency supply, is receding into a more advisory role as the market opens to broader participation and transparency. The numbers coming out of the first quarter of 2025 are telling a new story—one where policy, confidence, and market reform are beginning to realign after years of uncertainty.

Nigeria posted a net FX inflow of $15.20 billion in Q1 2025, up from $14.03 billion recorded in the same period of 2024. This improvement, though modest at a glance, speaks to a deeper structural shift. Total inflows in Q1 rose to $28.92 billion, an 18.68% increase year-on-year, while outflows jumped 32.72% to $13.72 billion.

A rise in outflows often suggests market confidence—when businesses and investors feel secure enough to engage globally, repatriate profits, or fund imports. But the net inflow staying positive amid rising outflows points to a market that is both liquid and resilient. It’s also a sign that Nigeria may be turning a corner from years of foreign exchange dysfunction.

Market Turnover and Reduced CBN Intervention

For decades, Nigeria’s FX market has been tightly managed by the central bank, with multiple exchange rates creating opacity, arbitrage, and at times—hoarding. That model came under increasing pressure during the twin recessions of the Buhari era, exacerbated by pandemic disruptions and falling oil revenues.

Since mid-2023, the Tinubu administration, working closely with the CBN, has pushed ahead with reforms aimed at liberalizing the FX market. The unification of the naira in 2023 was a flashpoint. But by 2024, the CBN was already pulling back from its role as the dominant market supplier. Now in 2025, its direct participation accounts for just 2% of total turnover, a far cry from previous regimes.

Average monthly turnover in the FX market has also increased to $8.1 billion in the first quarter of 2025, up from $5.5 billion in 2024. That increase in volume reflects not only more transactions but more transparency and confidence in pricing—a critical ingredient in restoring trust in the market.

Month-by-Month Trends and Market Maturity

Dissecting the quarter, January 2025 saw inflows of $9.41 billion and outflows of $4.84 billion, producing a net inflow of $4.56 billion. February delivered the strongest showing, with inflows at $10.64 billion and a net surplus of $6.92 billion as outflows slowed to $3.72 billion. In March, inflows tapered to $8.88 billion while outflows rose to $5.16 billion, narrowing the surplus to $3.72 billion.

These month-to-month shifts are normal in any open FX system, often indicating seasonal trade activity, debt service cycles, and external pressures like changes in global commodity prices. However, the market’s ability to remain net positive across all three months underscores a growing maturity.

Oil Prices, FX Focus, and Policy Reorientation

Crucially, this shift in FX performance is happening as Nigeria’s most dependable source of FX, crude oil, continues to face market headwinds. Brent crude prices, which hovered around $100 per barrel in 2022, have softened to the $70–$80 range for most of 2024 and early 2025, squeezing revenues for oil-dependent economies like Nigeria’s.

Rather than leaning heavily on dwindling oil receipts, the CBN has tightened its focus on attracting alternative FX sources. Diaspora remittances, portfolio investments, and export diversification have taken center stage.

At the Nigerian Investor Forum held during the IMF/World Bank Spring Meetings in Washington DC, CBN officials highlighted these reforms as critical to Nigeria’s financial stability. They pointed to restored interbank trading, the elimination of backlogs, and broader market access as milestones. According to the apex bank, these are not just bureaucratic fixes. They’re aimed at unlocking investor confidence and bringing in dollars that are willing to stay.

A Look Back at 2024—and the Road Ahead

In 2024, Nigeria attracted $99.4 billion in total FX inflows, a 44% increase over the year before. Net flows were also up 58%, thanks to policy reforms and aggressive clearing of FX backlogs. That strong performance laid the groundwork for the gains seen in early 2025.

However, Nigeria’s overall economic health poses a serious challenge to this little progress. The oil market remains volatile, with prices falling below the country’s 2025 budget benchmark. Also, rising inflation continues to erode domestic purchasing power, while the naira, though more reflective of market forces, is yet to stabilize enough to anchor long-term investor confidence.

Although the transformation in Nigeria’s foreign exchange market has significantly contributed to high inflation, it has changed its storylines. For the first time in years, the story is no longer just about scarcity, speculation, or backlogs. There are signs that Nigeria’s FX market is no longer the black box it once was. It is adjusting, reacting, and most importantly—attracting capital even as the traditional flow of petrodollars slows.

The World Bank has projected that Nigeria’s economy will grow by 3.6 percent in 2025, a slight increase from the estimated 3.4 percent in 2024, citing stabilizing reforms and improved performance in key non-oil sectors.

The projection, contained in the Spring 2025 edition of Africa’s Pulse, signals cautious optimism about the country’s economic prospects, even as the International Monetary Fund (IMF) maintains a more subdued outlook. The IMF recently revised Nigeria’s 2025 growth forecast downward to 3.0 percent and expects a further slowdown to 2.7 percent in 2026, citing weaker oil revenues and persistent structural issues.

According to the World Bank, Nigeria’s projected growth will be driven mainly by expansion in the services sector, specifically financial services, telecommunications, and information technology, along with easing inflationary pressures and improved business sentiment. The Bank expects growth to reach 3.8 percent by 2027, contingent on the continued implementation of reforms.

“Economic growth is expected to remain moderate in Nigeria. It is expected to increase from 3.4 percent in 2024 to 3.6 percent in 2025, and slightly increase to 3.8 percent in 2026–27,” the World Bank report stated.

It added that the recovery is expected to be led by the services sector and, to a lesser extent, a rebound in oil production, assuming Nigeria’s output gradually aligns with its OPEC+ quota.

Diverging Inflation Projections

The World Bank and IMF also diverge significantly on Nigeria’s inflation outlook.

The Bretton Wood institute estimates inflation will ease to 22.1 percent in 2025, down from 26.6 percent in 2024, and further decline to 15.9 percent by 2027. These projections are based on revised calculations following the January 2025 rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS).

In contrast, the IMF projects that inflation will average 26.5 percent in 2025 and rise sharply to 37.0 percent in 2026, citing lingering cost pressures, high exchange rate pass-through, and structural inefficiencies that continue to undermine price stability. The IMF warned that these factors could blunt the impact of ongoing reforms.

The NBS reported that Nigeria’s headline inflation dropped from 34.80 percent in December 2024 to 24.48 percent in January following the rebasing exercise but ticked up again to 24.23 percent by March, underscoring the volatility in food prices and other essentials.

Naira Among Africa’s Worst-Performing Currencies

The World Bank identified the Naira as one of the weakest African currencies in 2024, having depreciated by over 40 percent alongside the South Sudanese pound and Ethiopian birr. The steep depreciation followed Nigeria’s adoption of a market-driven exchange rate regime aimed at unifying the country’s multiple foreign exchange windows.

Although painful in the short term, the Bank noted that the policy shift has improved foreign exchange liquidity and reduced volatility in the currency market, laying the groundwork for more predictable macroeconomic conditions.

The Bank also projects Nigeria’s current account surplus will rise slightly from 9.2 percent of GDP in 2024 to 9.4 percent by 2026. This optimism is based on expectations of reduced imports, higher remittances, and an uptick in oil exports.

However, the IMF sees a different trend, forecasting that the surplus will narrow to 6.9 percent in 2025 and drop further to 5.2 percent in 2026, largely due to uncertainties around global oil prices and external demand.

Adding to the caution, JP Morgan warned that a decline in oil prices below Nigeria’s fiscal breakeven of $60 per barrel could reverse the surplus into a deficit. Fitch Ratings remains moderately optimistic, projecting a smaller average surplus of 3.3 percent of GDP for 2025–2026, supported by domestic refinery projects and energy sector reforms.

Data from the Central Bank of Nigeria (CBN) showed that the country recorded a Balance of Payments surplus of $6.83 billion in 2024—the first in three years—boosted by a goods trade surplus of $13.17 billion.

Return to Eurobond Market Highlights Fiscal Pressures

In December 2024, Nigeria re-entered the Eurobond market for the first time since 2022, raising $2.2 billion at a yield of 10.0 percent. This compares to the 8.54 percent yield Nigeria secured in its 2018 issuance.

The higher borrowing cost reflects investor concerns over macroeconomic risks and the global trend of elevated interest rates. The World Bank noted that other African countries, including Cameroon, have also issued debt at double-digit yields, indicating a broader regional trend of costlier external borrowing.

While Nigeria’s return to international capital markets points to renewed investor interest, it also underscores rising debt-servicing costs amid tightening fiscal conditions.

The World Bank and IMF have both welcomed Nigeria’s recent macroeconomic reforms, including the removal of fuel subsidies, cessation of CBN deficit financing, and exchange rate unification. These steps are seen as critical to restoring fiscal discipline and rebuilding investor confidence.

However, the IMF cautioned that inflation remains entrenched, and gains in overall GDP growth have not yet translated into meaningful improvements in living standards.

According to the Fund, real income per capita is projected to grow by just 0.6 percent in 2025, indicating that while macroeconomic indicators may be improving, the average Nigerian could continue to face economic hardship.

The World Bank echoed similar sentiments, noting that while reforms are essential, Nigeria’s economic recovery remains fragile and dependent on sustained policy implementation, particularly in boosting non-oil revenues and addressing structural weaknesses in the economy.

Tesla has begun quietly testing its long-promised autonomous ride-hailing service among employees in Austin and the San Francisco Bay Area, as the company races to reclaim ground in a segment it once vowed to dominate.

The rollout comes ahead of a planned June launch of the company’s first commercial robotaxi fleet in Austin.

In a post shared Wednesday on its official X handle, the electric vehicle (EV) maker announced: “FSD Supervised ride-hailing service is live for an early set of employees in Austin & San Francisco Bay Area.”

Tesla’s “FSD” — short for Full Self-Driving — is its advanced driver assistance software, which enables some automated driving functions but still requires a human behind the wheel. Despite the branding, the system does not yet provide fully autonomous driving.

While thousands of Tesla owners already use FSD in its current supervised form, Wednesday’s announcement marks the first formal indication that Tesla is rolling out an accompanying ride-hail app — a critical component of its robotaxi vision. This app, though still in early testing, is expected to enable non-Tesla owners to summon autonomous rides in Tesla vehicles, a pivot away from the company’s historic ownership-centric model.

In a promotional video accompanying the announcement, Tesla showcased a Model 3 sedan equipped with a rear-seat touchscreen displaying estimated time of arrival, music and climate controls, and an emergency stop button — features intended to simulate a passenger-centric, driverless experience. However, a disclaimer at the bottom clarified that a safety driver remains present and that “FSD (Supervised) does not make the vehicle autonomous.”

A Comeback Amid Waymo’s Lead

Tesla’s renewed push into autonomous ride-hailing comes as rival Waymo, owned by Google parent Alphabet, expands its footprint across several U.S. cities with fully driverless vehicles. Waymo already operates commercial robotaxi services in Phoenix and parts of San Francisco, with plans to enter Los Angeles and Austin later this year. Unlike Tesla, Waymo’s service is fully autonomous, operating without safety drivers in many cases.

Waymo’s steady progress and public accessibility have allowed it to eclipse Tesla in the race to commercialize autonomous mobility — a domain Elon Musk once declared Tesla would dominate by 2020. Back then, Musk had predicted that millions of Tesla cars would soon be earning income for their owners as part of a global robotaxi network.

That didn’t happen.

Years of regulatory hurdles, technological setbacks, and growing scrutiny over the safety of Tesla’s FSD software left the company trailing in a space it helped popularize. While Tesla continued improving its vision-based approach, eschewing sensors like LIDAR that companies like Waymo rely on, its robotaxi plans all but disappeared from public discourse.

From Dormancy to Lifeline

Now, the sudden revival of Tesla’s autonomous ride-hailing plans appears less like an expansion and more like a lifeline. The company is grappling with a slowdown in global EV sales, increasingly blamed on a mix of market saturation, price wars, and reputational damage tied to CEO Elon Musk’s outspoken right-wing politics.

Over the last year, Musk has courted controversy on his social media platform X, alienating progressive customers in key markets like California and Europe, while Tesla’s share price has suffered repeated setbacks. This political drift has coincided with a steep drop in demand for Tesla vehicles and mounting competition from both Chinese automakers and legacy car companies entering the EV race.

With its core business under pressure, including the flop of cybertruck, Tesla appears to be returning to the autonomous ride-hailing dream as a potential pathway to recovery and long-term growth. During the company’s Q1 earnings call on Tuesday, Musk confirmed that Tesla plans to deploy 10 to 20 robotaxis on the streets of Austin by June. However, he offered few specifics, including whether those vehicles would operate without safety drivers or when Tesla might begin charging customers.

That ambiguity adds to regulatory challenges, particularly in California, where the company has only secured permits to test vehicles with a human driver. Launching a fully driverless commercial service would require Tesla to obtain additional permits from the California Public Utilities Commission and the Department of Motor Vehicles — approvals that competitors like Waymo and Cruise spent years working toward.

In January, Musk declared that Tesla’s upcoming robotaxi would ship without a steering wheel or pedals — a reference to the so-called “Cybercab” concept. But for now, Tesla is leaning on its existing fleet, including the Model 3 and Model Y, to begin limited service.

The return to the robotaxi narrative reflects more than just a technological milestone, it is believed to be an attempt to reinvigorate investor confidence and reset the narrative around Tesla’s future. For years, the company sold itself not merely as a carmaker but as a software and AI powerhouse poised to disrupt mobility. Failing to deliver on the robotaxi promise had cast doubt on that pitch.