Nigeria’s foreign reserves have maintained a considerable improvement in recent months. It leisurely crossed the $40 billion mark in November 2024, though it opened 2025 lower at $39.77 billion.
Many are impressed by the improvement in Nigeria’s foreign reserves. However, the World Bank expressed grave concern despite the perfunctory climb of the reserves.
The World Bank is worried that Nigeria operates a one-handed economy with heavy dependence on crude oil exports. Non-oil exports contribution to Nigeria’s foreign reserves is rather insignificant.
For instance, non-oil exports accounted for a paltry $1.79 billion in the first quarter of 2025, though it was applauded as a 24 per cent increase from the first half of 2024.
Crude oil exports have been the mainstay of Nigeria’s economy as it accounts for well over 80 per cent of its foreign reserves.
The World Bank argues that Nigeria’s foreign reserves remain vulnerable as the trade war torched off by U.S. President Donald Trump’s tariff enigma rocks commodities prices.
There are fears that the tariff war triggered by Trump will almost certainly slow down global economic growth and consequently reduce crude oil consumption by leading industrial nations.
Though it is yet to snowball into a full scale trade war, Trump’s punitive tariffs, especially against China, Mexico and America’s closest ally, Canada, has already taken a toll on crude oil prices.
Prices of crude oil have tumbled by well over $10 per barrel since Trump’s “Liberation Day” tariff attacks on scores of nations including America’s allies in the European Union (EU).
Nigeria’s 2025 budget is perhaps the first casualty of the brewing trade war. Architects of the budget defiantly predicated it upon an ambitious oil reference price of $75 per barrel even as there were strong indications that Trump would return to power as U.S. president and implement policies that will compromise crude oil demand and bring down prices.
Two weeks ago, price of Bonny Light, Nigeria’s sweet light crude oil, dropped by $15 to an abysmal $60 per barrel.
Right now the federal government is desperately searching for revenue to balance the budget in the face of tumbling crude oil prices.
The World Bank has advised the federal government to fight inflation, halt the despicable depreciation of the naira and address the nation’s reprehensible infrastructure deficits in a bid to diversify the economy and enable it to absorb shocks from tumbling oil price and stabilise reserves.
Akinwunmi Adesina, president of the Africa Development Bank (AfDB), shared the World Bank’s concern and recently advised the federal government to accelerate the industrialisation of the country in a desperate bid to diversify the economy from dependence on crude oil exports.
That is precisely how Nigeria can ward off the brewing external shocks from tumbling commodities prices triggered by Trump’s enigmatic tariff war.
The federal government should start the industralisation process by tremendously increasing the nation’s crude oil refining capacity.
That will consolidate the country’s position in the refined products export market and bring in more foreign exchange than crude oil exports.
It will also activate the nation’s dormant petrochemical industry which was crippled by decades of operating the country without a refinery.
The Nigerian National Petroleum Company Limited (NNPCL) recently issued licenses for the construction of 47 new refineries in the country.
That is not good news yet. The good news will come when they all mobilise to site. We have had scores of licenses issued in the past that never left the planning stage.
Government must encourage the current licensees to build and operate refineries.
Nigeria’s electric power deficit is worsening by the day. Since the beginning of this year, some communities have not had power for more than five hours in a day. The national grid has collapsed about three times this year.
Those who have power are paying through the nose. Band A tariff is something of an economic calamity. Public hospitals can no longer pay their electricity bills which now come in nine digits.
The plague of Band A tariff is so catastrophic that the presidency has allocated N10 billion in the 2025 budget to switch to solar power.
The federal government must address the power deficit and rehabilitate the rail system to enable manufacturers and thousands of artisans contribute their quota to Nigeria’s gross domestic product (GDP).
The electric power deficit is a catastrophe for Nigeria’s economy. In a desperate bid to generate their own power to operate their factories, Nigerian manufacturers spent N1.1 trillion on petrol and diesel in 2024.
That, and lending rates hovering around 40 per cent, escalated production cost and pushed the cost of their products beyond the reach of consumers. They ended up retrenching more than 17,000 skilled workers as unplanned inventory (stock of unsold goods) surged to N2.4 trillion.
Blueprint is deeply disturbed by the World Bank alarm on the effect of tumbling commodities prices on Nigeria’s foreign reserves. We enjoin the federal government to promptly diversify the economy to stabilise the reserves.