Emmanuel OchayiNet Forex Inflows Experience Significant Growth in 2024
Net foreign exchange (Net Forex) inflows into Nigeria’s economy surged by 67.8% in the first half of 2024, rising from $16.44 billion in the same period of 2023 to $27.6 billion. This growth was driven by an increase in inflows from autonomous sources and stronger inflows through the Central Bank of Nigeria (CBN).
The CBN’s Economic Statistics report highlights the substantial increase, showing that overall foreign exchange inflows to the economy increased by 41.6% year-on-year (YoY), reaching $47.73 billion, compared to $33.7 billion in the first half of 2023.
Join our WhatsApp ChannelAutonomous Sources Boost Net Forex Inflows
A major contributor to the rise in Net Forex inflows was the 34.6% YoY increase in inflows through autonomous sources. Gross inflows through these sources grew to $31.15 billion in H1 2024 from $21.16 billion in H1 2023.
Economic expert, Olu Fadeyi, commented, “The rise in autonomous inflows shows that the private sector is contributing significantly to the economy, especially in foreign exchange earnings. This is a promising sign for Nigeria’s economic growth.”
However, Fadeyi cautioned about rising outflows, noting that “forex outflows also increased by 16.3% YoY to $20.12 billion in H1 2024, and this might affect overall forex reserves if not checked.”
CBN’s Role in Strengthening Net Forex Inflows
The CBN’s role in boosting Net Forex inflows was evident in its performance, as the report showed that net inflows through the CBN increased by a staggering 170% YoY, from -$2.65 billion in H1 2023 to $1.86 billion in H1 2024. The CBN attributed this to its policies aimed at increasing forex liquidity.
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CBN Governor, Dr. Yemi Cardoso, said, “Our efforts in managing foreign exchange markets and promoting remittances are beginning to yield results. We are committed to ensuring stability in the forex market, which is critical for economic growth.”
IMTOs Also Contribute to Forex Growth
Another key driver of the forex inflows was the performance of International Money Transfer Operators (IMTOs). Inflows from IMTOs grew by 47% YoY to $2.33 billion in the first half of 2024 from $1.58 billion in H1 2023. This growth came after the CBN implemented measures to give IMTOs better access to naira liquidity at the official exchange rate window.
Dr. Cardoso emphasized the importance of these measures: “Allowing IMTOs more access to naira liquidity was essential for increasing formal remittance channels. This will continue to strengthen our foreign exchange position.”
Outflows Pose a Challenge
Despite the impressive inflows, forex outflows also saw an increase. Outflows through autonomous sources rose sharply by 160.8% YoY, from $2.07 billion in H1 2023 to $5.4 billion in H1 2024, which could pressure Nigeria’s foreign reserves. The CBN also saw a 15% decline in its outflows, from $17.29 billion in H1 2023 to $14.7 billion in H1 2024.
Looking Ahead
The rise in Net Forex inflows is a positive development for Nigeria’s economy, but experts caution that managing outflows will be critical to maintaining forex reserves. With continued efforts from both autonomous sources and the CBN, Nigeria could see further growth in its foreign exchange reserves in the coming months.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
