Three years after Nigeria embarked on sweeping macroeconomic reforms, economists have urged the Federal Government to move beyond stabilising the economy and focus on building a more productive, diversified and inclusive economic system capable of delivering lasting prosperity.
The recommendation formed a kernel of the Daily Trust Board of Economists' Review of Nigeria's External Sector, which assessed the country's economic performance since the reform programme began in 2023.
According to the report, Nigeria has made significant progress in restoring confidence in its external sector, but the next stage of reforms must prioritize structural transformation that creates jobs, expands exports and improves living standards.
The Board noted that Nigeria's external position has strengthened remarkably following difficult policy decisions, including the liberalisation of the foreign exchange market and the removal of fuel subsidies. These reforms corrected longstanding distortions, restored investor confidence and improved the country's ability to withstand external shocks.
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Among the strongest indicators of recovery is the growth in Nigeria's foreign exchange reserves, which increased from about US$33 billion in mid-2023 to nearly US$50 billion by mid-2026. The balance of payments also returned to a surplus estimated at US$6.8 billion, while liquidity in the foreign exchange market improved considerably.
The board observed that greater transparency in exchange-rate management and tighter monetary policy contributed to narrowing the gap between official and parallel market exchange rates. These measures also encouraged stronger participation by investors, resulting in a significant rebound in capital inflows.
Data cited in the report showed that capital importation climbed to US$23.21 billion in 2025, representing an increase of nearly 89 percent over the previous year and almost six times the level recorded in 2023. The positive trend continued into 2026, with the first quarter alone attracting more than US$10 billion in capital inflows.
The Board also highlighted Nigeria's return to the FTSE Russell Frontier Market Index and improvements in its sovereign credit rating as further evidence that international confidence in the country's economy has strengthened.
Diaspora remittances continued to provide critical support for the economy, reaching nearly US$21 billion in 2024 and remaining one of the country's most stable sources of foreign exchange.
At the same time, crude oil production recovered to above 1.7 million barrels per day, while exports of agricultural products such as cocoa, sesame seed, fertiliser and cashew expanded significantly.
Despite these achievements, the Daily Trust economists cautioned against interpreting macroeconomic stability as evidence of complete economic transformation.
According to the report, Nigeria remains heavily dependent on crude oil exports, with non-oil products contributing only a modest share of total merchandise exports.
The composition of capital inflows also raises concern because most investments continue to be in short-term portfolio assets rather than productive sectors capable of generating employment and long-term growth.
Foreign Direct Investment, which typically finances factories, infrastructure and technology transfer, accounted for only a small fraction of total capital inflows during the first quarter of 2026.
In contrast, portfolio investments represented the overwhelming majority of foreign capital entering the country.
The Board warned that while portfolio investments strengthen reserves and improve liquidity, they are often volatile and can leave quickly when global financial conditions change.
Sustainable economic resilience, the report argued, depends on attracting investment into manufacturing, agriculture, solid minerals, technology and other productive industries.
The geographical distribution of investment also remains highly uneven. Lagos and the Federal Capital Territory accounted for virtually all foreign capital imported into Nigeria, leaving many states with little or no direct investment.
The board stressed that balanced regional development would be essential if economic reforms are to benefit citizens across the country.
One of the report's findings relates to developments in Nigeria's petroleum sector. The expansion of domestic refining capacity has dramatically reduced the country's dependence on imported petroleum products.
According to the Board, Nigeria's petroleum import bill declined sharply as local refineries increased production, supplying a substantial share of domestic fuel demand while creating opportunities for exports of refined petroleum products. This development illustrates how productive investment can conserve foreign exchange, strengthen industrial capacity and create new export earnings.
The economists argued that this example demonstrates the difference between macroeconomic stabilisation and structural transformation. While improved reserves and stronger financial markets create a favourable environment, long-term prosperity depends on expanding productive industries that generate value, create employment and improve competitiveness.
Looking ahead, the Board outlined several priorities for the Federal Government.
First, it recommended maintaining policy credibility through transparent fiscal and monetary coordination while preserving reforms that have restored confidence in the economy.
At the same time, the economists called for stronger social protection programmes to cushion vulnerable households affected by higher living costs resulting from recent reforms.
Second, the report urged the government to place export diversification at the centre of economic policy. Greater support should be directed toward agriculture, manufacturing, petrochemicals, solid minerals, digital services and the creative economy to reduce dependence on crude oil revenues.
Also, the Board called for reforms that would attract greater volumes of productive long-term investment.
Improving regulatory certainty, strengthening contract enforcement and creating a more business-friendly environment were identified as essential measures for increasing Foreign Direct Investment.
The report also recommended increased investment in electricity, transportation, digital infrastructure, education and logistics to improve the competitiveness of Nigerian businesses.
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Lower production costs and better infrastructure, the economists argued, would enable domestic firms to compete more effectively in international markets.
Another recommendation was the gradual reduction of financing costs once inflation moderates. Although higher interest rates have helped stabilise the economy and support the naira, they have also increased borrowing costs for businesses. A carefully managed transition toward lower financing costs could stimulate industrial expansion and job creation without undermining macroeconomic stability.
The Board concluded that Nigeria now stands at an important turning point. The difficult reforms implemented since 2023 have restored confidence, strengthened external buffers and improved financial stability. However, these achievements should be viewed as the foundation rather than the destination of economic reform.
Ultimately, the report stated, the country's success should not be measured solely by larger foreign exchange reserves, stronger balance-of-payments figures or increased capital inflows. Instead, true progress will be reflected in a more diversified economy, stronger domestic industries, rising productivity, expanded employment opportunities and improved living standards for Nigerians.
The economists noted that macroeconomic stabilisation has laid the foundation, adding that the task before policymakers now is to build a resilient economy that transforms those gains into sustainable growth, broad-based prosperity and lasting structural transformation.
