On 18 October 2026, TheCable reported feedback by Mustafa Chike-Obi questioning the financial advantages and monetary prices of sustaining Nigeria’s rising exterior reserves.
His central argument was that Nigeria’s reserves, then estimated at $52–$53 billion, have been costing
the nation greater than $10 billion yearly as a result of the overseas property earned roughly 3%, whereas the naira used to finance them attracted an estimated 20% curiosity value.
He additionally mentioned overseas reserves alone aren’t financial prosperity and that common Nigerians aren’t
higher off.
Understanding Nigeria’s Remarkable Reserve Recovery
According to information offered within the International Monetary Fund’s 2026 Article IV report, Nigeria’s gross exterior reserves stood at roughly $33.2 billion on the finish of 2023, rising to $40.2 billion in 2024 and $45.8 billion on the finish of 2025.
By 28 October 2026, the CBN’s printed reserve collection had reached roughly $55.26 billion.
Where Is All This Foreign Exchange Coming From?
First, Nigeria’s commerce and current-account positions have improved. The IMF reported a current-account surplus equal to 4.8% of GDP ($13.944 billion) in 2025, supported by oil and fuel exports and decrease refined-petroleum imports as home refining expanded. In Q2 2026, the CBN recorded a $7.54 billion surplus. Like a family incomes extra whereas shopping for much less from overseas, Nigeria’s exterior place improves when exports rise and import demand falls.
Second, remittances have strengthened overseas trade provide. CBN balance-of-payments figures put private transfers at roughly $5.82 billion in Q2 2026. They don’t mechanically develop into CBN reserves however enhance greenback availability and might ease naira strain.
Third, overseas portfolio investments and borrowing have contributed. The IMF recognized roughly $6 billion in internet purchases of CBN OMO devices by non-resident traders in 2025, alongside a $2.3 billion Eurobond issuance. These flows help FX provide however carry dangers, OMO holdings can reverse, whereas Eurobonds require debt service.
Reserve development subsequently displays exterior earnings, decrease import necessities, monetary inflows and borrowing, not one supply. A current-account surplus doesn’t mechanically develop into central-bank reserves, the eventual affect is determined by who receives the overseas trade and whether or not the CBN acquires it.
Interrogating the Alleged $10 Billion Annual Cost
The CBN can purchase FX from oil receipts or market purchases, creating corresponding naira liquidity. Whether that liquidity subsequently requires interest-bearing sterilisation is determined by financial situations and coverage decisions.
But that doesn’t set up that each greenback in the complete $55 billion reserve portfolio carries the identical funding value. The related calculation should take into account the precise inventory of interest-bearing liabilities, relevant charges, reserve funding earnings and different related prices.
Seventeen p.c of $52 billion is roughly $8.84 billion, At $53 billion, it’s $9.01 billion. These are hypothetical interest-rate-spread calculations, not demonstrated annual losses recorded by the CBN. But the precise value have to be established by analysing the CBN’s steadiness sheet and
financing preparations, not inferred by making use of a single interest-rate differential to each greenback of gross reserves.
Why Foreign Reserves Are More Than Money Sitting Abroad
Foreign reserves aren’t primarily accrued to maximise funding returns. The CBN’s statutory duty contains sustaining exterior reserves to safeguard the worldwide worth of the naira. This is an insurance coverage operate. However, I imagine Chike-Obi’s View Is Important the CBN should stay Accountable.
The IMF estimated that Nigeria’s gross reserves on the finish of 2025 stood at roughly 157% of its reserve-adequacy metric, above the traditional 100–150% vary thought of broadly ample for precautionary functions.
Questions concerning the marginal advantage of further reserves are subsequently affordable. The IMF’s 2026 evaluation famous that roughly $8 billion in reserve property pledged underneath a securities-lending association on the finish of 2025 could be excluded underneath its reserve definition.
Consequently, the distinction between the CBN’s printed gross reserves and absolutely obtainable, unencumbered exterior property deserves nearer examination.
My View
Nigeria’s problem just isn’t merely deciding whether or not $55 billion is an excessive amount of or too little. The nation ought to progressively cut back its dependence on costly short-term portfolio capital whereas increasing overseas trade earnings from non-oil exports, manufactured items, companies and competitively priced vitality merchandise.
Conclusion
I imagine Mustafa Chike-Obi has raised a worthwhile query concerning the financial prices of sustaining massive overseas reserves. However, his reported $10 billion annual value estimate just isn’t established by the arithmetic or by the financing assumptions offered, and the common Nigerian can by no means be higher off if reserves are low.
More importantly, the argument dangers understating the financial worth of rebuilding exterior liquidity after years of overseas trade instability. Nigeria’s latest reserve development ought to neither be celebrated with out scrutiny nor dismissed as an costly accounting train. It’s a key signal of financial coverage competence.
About the Author
Benjamin Awokumaka (Ben Awoks) is the Founder & Managing Consultant of Awoks Consulting, a multidisciplinary advisory and enterprise constructing agency specialising in administration consulting, monetary advisory, compliance and cybersecurity.
He has supported companies in producing thousands and thousands in cumulative income and actively contributes to financial coverage discourse, advocating for market-driven reforms, industrialisation and sustainable financial development in Nigeria.
