The World Bank has identified a significant gap in Nigeria's external accounts for the first half of 2026. According to the Bank's October 2026 Nigeria Development Update report, a $12.4 billion unexplained gap has been recorded. This revelation has raised concerns about the country's financial transactions and the repatriation of oil export earnings. The report highlights that this gap may partly reflect oil export earnings that were not repatriated to the country.
Despite the gap, Nigeria recorded a current account surplus of $12.0 billion in the first half of 2026, equivalent to 7.0 per cent of gross domestic product (GDP). This represents an increase from $8.6 billion in the corresponding period of 2025. The World Bank attributes the improvement mainly to higher oil prices and lower spending on oil imports. Additionally, net financial inflows added another $6.2 billion during the period.
The World Bank's report notes that the surplus and inflows should have strengthened the country's foreign reserves. However, instead, the Bank reported net errors and omissions of -$12.4 billion, an accounting item covering transactions or flows that cannot be fully reconciled in the balance of payments. The report suggests that this gap might partly reflect oil export proceeds that were not repatriated.
The report also highlights that foreign direct investment (FDI) in Nigeria remains low, while short-term portfolio investors have become a major source of foreign exchange. Net portfolio inflows rose by 80.8 per cent to $12.2 billion during the period, while direct investment fell by 15 per cent to $2.2 billion. The Bank warns that reliance on short-term investors could expose the reserves to sudden withdrawals.
Gross external reserves in Nigeria increased from $45.5 billion at the end of 2025 to $53.8 billion at the end of August 2026. However, the World Bank notes that it has no recent estimate of net reserves, which stood at $34.8 billion at the end of 2025. The Bank's report emphasizes that the repatriation of export proceeds "remains limited, including due to oil pledges".
President Bola Tinubu has welcomed the findings as evidence that his administration's economic reforms are yielding results. The World Bank's report also notes a sharp rise in state revenues and capital spending, with state governments allocating more funds to roads, agriculture, power, and housing. However, despite these positive developments, the Bank warns that poverty and food insecurity remain widespread in Nigeria.
The Central Bank of Nigeria (CBN) has taken steps to address some of the issues, including removing restrictions on international oil companies transferring export earnings abroad and allowing account holders unrestricted access to their dollar balances. The World Bank's report emphasizes the need for continued efforts to improve the country's financial transparency and repatriation of export proceeds.
Key points
- The World Bank has identified a $12.4 billion unexplained gap in Nigeria's external accounts for H1 2026.
- Nigeria recorded a current account surplus of $12.0 billion in H1 2026, driven by higher oil prices and lower spending on oil imports.
- The World Bank warns that reliance on short-term investors could expose Nigeria's reserves to sudden withdrawals.
