Nigeria recorded an unexplained $12.4 billion gap in its external accounts in the first half of 2026, raising concerns about the repatriation of export earnings and the accuracy of data used to track foreign exchange flows.
The World Bank identified the discrepancy in its October 2026 Nigeria Development Update, describing it as negative net errors and omissions in the country’s balance of payments. The figure may partly reflect oil export proceeds that were not brought back into Nigeria, although the bank said data gaps could also have contributed.
The finding came as Nigeria recorded a current account surplus of $12 billion, equivalent to 7 per cent of gross domestic product (GDP), while net financial inflows reached $6.2 billion during the period.
Together, these inflows should ordinarily have supported further growth in foreign reserves. However, the unexplained $12.4 billion discrepancy offset much of their combined value.
The World Bank attributed the stronger current account position to increased oil exports and lower oil imports, alongside higher international oil prices since March, linked to the conflict in the Middle East.
Crude oil and gas exports rose 19.6 per cent compared with the second half of 2025, while refined oil exports increased 48 per cent, although from a smaller base. Oil imports fell 54.6 per cent over the same period.
Nigeria’s current account surplus compared with $5.5 billion in the second half of 2025 and $8.6 billion in the first half of that year.
Weak export repatriation raises concerns
Despite the improvement in external trade, the World Bank said Nigeria continued to struggle to attract stable foreign investment and bring export earnings back into the domestic financial system.
The bank noted that limited repatriation of export proceeds, partly associated with oil-backed financing arrangements, remained a challenge. It did not specify how much of the $12.4 billion discrepancy was attributable to oil earnings or identify any companies involved.
Foreign direct investment liabilities fell 15 per cent to $2.2 billion in the first half of 2026, leaving Nigeria with one of the region’s weaker direct investment positions relative to the size of its economy.
In contrast, net foreign portfolio investment inflows increased 80.8 per cent to $12.2 billion, supported by high domestic yields and relative exchange-rate stability.
Foreign portfolio investment accounted for 45 per cent of gross inflows through the Nigerian Foreign Exchange Market between January and August 2026. These inflows were concentrated largely in fixed-income instruments, including Open Market Operations securities.
However, portfolio investments are generally more sensitive to changing market conditions than long-term direct investments. A sudden withdrawal by investors could put pressure on foreign exchange liquidity and reserves.
Foreign reserves rise to $53.8bn
Nigeria’s gross external reserves increased from $45.5 billion at the end of 2025 to $53.8 billion at the end of August 2026, with portfolio inflows contributing to the growth.
The World Bank, however, said the absence of a more recent estimate of net reserves limited its assessment of the country’s usable external buffers. The latest available estimate placed net reserves at $34.8 billion at the end of 2025.
Gross reserves represent the country’s total reported external reserve assets, while net reserves account for certain liabilities and provide a different measure of the resources available to support external payments.
The bank warned that Nigeria’s dependence on short-term capital could increase its exposure to sudden outflows if global financial conditions deteriorate or investors become less willing to take risks in emerging markets.
CBN reforms improve foreign exchange operations
The World Bank acknowledged improvements in Nigeria’s foreign exchange market following reforms introduced by the Central Bank of Nigeria (CBN) since 2024.
The measures included removing restrictions that had limited international oil companies’ ability to transfer export proceeds abroad, granting account holders unrestricted access to domiciliary balances, simplifying remittance procedures and increasing the advance-payment limit for imports.
The CBN also strengthened the integration of bureaux de change into the official foreign exchange market through a centralised platform and standardised due diligence requirements.
According to the World Bank, these changes could reduce fragmentation in the retail foreign exchange market, improve exchange-rate predictability and encourage greater domestic holding of naira.
Nevertheless, the continued weakness in export-proceeds repatriation and foreign direct investment suggests that the reforms have not fully resolved Nigeria’s external financing challenges.
World Bank calls for further reforms
The bank recommended additional measures to deepen the foreign exchange market, including progressively allowing banks to hold net open foreign exchange positions and improving transparency around the CBN’s foreign exchange intervention framework.
It also stressed the importance of sustained macroeconomic stability and structural reforms that improve investment returns and reduce business risks.
Attracting more long-term foreign investment and ensuring that export earnings return to the domestic financial system could help strengthen the country’s external position and reduce reliance on volatile portfolio inflows.
The $12.4 billion discrepancy does not, by itself, establish that the entire amount represents missing oil revenue. However, it highlights the need for clearer reporting and better reconciliation of international transactions as Nigeria seeks to sustain reserve growth and improve foreign exchange stability.
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