Nigeria's Current Account Collapse Signals Economic Headwinds Amid Currency Stability

Nigeria's external account position deteriorated significantly in the final quarter of 2025, with the country's current account surplus plummeting 65.52% to just $1.4 billion from $4.06 billion in Q3. This sharp contraction represents a critical inflection point for Africa's largest economy and carries profound implications for European investors and operators already positioned in the Nigerian market. The dramatic quarterly decline reflects mounting structural vulnerabilities in Nigeria's external sector despite superficial currency stability. According to recent foreign exchange data from March 2026, the Naira has maintained relative steadiness against the US Dollar, buoyed primarily by elevated global oil prices and accumulated external reserves. However, this apparent stability masks an increasingly precarious underlying position—one where external buffers are being consumed to defend the currency rather than generated through sustainable economic performance. For European entrepreneurs operating in Nigeria, this distinction matters considerably. While the stable exchange rate environment provides near-term predictability for cost management and dividend repatriation, the erosion of current account surpluses signals deteriorating competitiveness in Nigeria's core export sectors. The 65% quarterly contraction cannot be attributed solely to seasonal variations; rather, it suggests deepening structural imbalances between imports and exports that threaten the sustainability of currency management policies. The Central Bank