Business
‘$90b revenue loss triggered major economic reforms’
The Central Bank of Nigeria (CBN) has said the loss of about $90 billion in oil revenue over 11 years forced the Federal Government to introduce the sweeping economic reforms currently being implemented in the country.
The apex bank gave the explanation as it spoke publicly in detail about the reasons behind the reforms that include the removal of fuel subsidy, changes in the foreign exchange system and tighter monetary policy.
Speaking at the Agora Policy Stakeholders Dialogue held in Abuja on Thursday, the CBN Deputy Governor in charge of Economic Policy Directorate, Muhammad Sani Abdullahi, said Nigeria’s oil revenue fell sharply from $92 billion in 2012 to less than $2 billion in 2023, representing a drop of about 98 per cent in expected earnings within the period.
Abdullahi said the development was one of the major factors that pushed the government to act quickly to stabilise the economy.
“Nigeria faced severe macroeconomic imbalances, economic distortions, and collapsing revenues before major reforms began,” he said.
According to him, the economic problems facing the country were not limited to the oil sector. He explained that foreign direct investment had been declining for about a decade because investors were uncertain about the exchange rate system.
He also noted that foreign portfolio investment dropped sharply as many investors feared they might not be able to take their money out of the country when they wished.
The CBN deputy governor added that the non-oil export sector also weakened significantly during the period. He said cocoa exports, which once earned the country about $2 billion, fell to less than $300 million within a few years.
Abdullahi further revealed that Nigeria’s true foreign reserve position was extremely weak before the reforms began.
According to him, while the country’s official reserves appeared to be about $32 billion, most of that money consisted of borrowed funds and financial swaps, leaving the country with net reserves of only about $800 million.
He said the difficult economic situation forced the government and the CBN to introduce a series of reforms aimed at correcting long-standing distortions in the economy.
Part of the measures, he said, included allowing the naira exchange rate to adjust naturally so it could absorb economic shocks, instead of maintaining artificial controls that had discouraged investment.
Abdullahi explained that the reforms had to be implemented quickly because the country was facing a crisis that did not allow for slow or gradual adjustments.
Despite the hardship that followed the reforms, the CBN said the policies were beginning to produce positive results.
According to Abdullahi, inflation has been falling steadily for about 19 months, while food inflation is currently at its lowest level in about 13 years.
He added that the country is gradually moving toward single-digit inflation, something Nigeria has not achieved in about 12 years.
The CBN deputy governor also disclosed that net foreign reserves have grown from about $800 million to roughly $32 billion, a development he said has improved international confidence in the Nigerian economy.
He said investors are beginning to see Nigeria as a more attractive destination, noting that the country is now being ranked among the top emerging markets for investment.
According to him, capital inflows into the country have continued even during periods of global tension because investors believe the economy is becoming more stable and interest rates remain attractive.
Abdullahi added that the government is also working to revive the oil sector and unlock previously unused assets to increase production and revenue.
He said non-oil exports have reached their highest level in about 10 years, generating around $6 billion last year, with the government targeting $12 billion in the near future.
He also pointed to the Purchasing Managers’ Index (PMI), which tracks business activity, saying the indicator has reached its highest level in about a decade, suggesting that companies are beginning to expand operations.
According to him, the Nigerian economy is gradually moving away from the severe imbalances it faced in the past and is on a path toward recovery, although important social challenges still remain.
Also speaking at the event, the Director-General of the Lagos Chamber of Commerce and Industry, Chinyere Almona, said the reforms had corrected many long-standing distortions in the economy but had also placed significant pressure on businesses.
“I believe that when you put together the petrol subsidy removal, the exchange rate liberalisation, monetary tightening and electricity tariff adjustments, these have put a lot of pressure on the private sector,” she said.
Almona said the removal of petrol subsidy alone could free up about $7.5 billion for government every year, which should ideally be invested in infrastructure and human capital development.
“For the private sector, what we want to see is that the savings from the fuel subsidy removal are actually being used to fund infrastructure,” she said.
She explained that many businesses are struggling because the cost of generating electricity has risen sharply following the increase in fuel prices.
“Almost between 40 and 50 per cent of a business cost will be power,” she said, noting that many companies rely on generators to run their operations.
Almona added that while macroeconomic indicators such as the balance of payments and foreign reserves have improved, many ordinary Nigerians and small businesses are yet to feel the benefits.
“The economy is improving at the macro level, but that improvement has not trickled down to the common man and many small businesses,” she said.
She therefore called for complementary policies that would support the private sector, including better access to credit and targeted support for small and medium-sized enterprises.
At the dialogue, a new study by Agora Policy also examined how the reforms have affected ordinary Nigerians and businesses.
Presented by Dr. Mohammed Shuaibu of the Department of Economics, University of Abuja, the report found that the removal of petrol subsidy, the floating of the naira and higher electricity tariffs have significantly increased the cost of living across the country.
According to the study, petrol prices rose from an average of ₦161 per litre to more than ₦1,200, while electricity tariffs in some cases jumped from ₦68 to about ₦225 per unit.
The report said the cost of a healthy meal increased from about ₦515 in mid-2023 to around ₦1,611 by July 2025, while transport fares between cities have almost doubled.
Many households interviewed for the study said they now trek longer distances, reduce the number of meals they eat daily and limit their electricity use to cope with the rising cost of living.
Children, women and elderly people were identified as the groups most affected by the economic pressures, with many families borrowing money to buy food.
Small businesses and farmers are also struggling as higher fuel and electricity costs push up operating expenses.
Some business owners said they have been forced to increase prices, reduce staff numbers or shut down completely to survive.
The study also noted that government relief programmes, including cash transfers and the new minimum wage, took longer than expected to reach many Nigerians.
It added that the ₦75,000 cash support provided to some households was not enough to cover rising costs of food, housing and healthcare.
To reduce the impact of future reforms, the report advised the government to introduce major policy changes gradually and ensure support measures are ready before the policies take effect.
It also recommended improving the national social register so that assistance can reach vulnerable Nigerians quickly, while suggesting tax relief for the transport and agriculture sectors to help lower the cost of food and travel.
The study further called on the government to communicate more clearly with citizens about the reasons for economic changes while showing greater understanding of the difficulties many Nigerians are facing.
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