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LAGOS – Nigeria’s fragile external position has again come under pressure as fresh balance of payments data from the Central Bank of Nigeria (CBN) reveal a widening deficit in the services component of the current account, underlining deep structural weaknesses in the economy.
While the country posted a net current account surplus of $3.4 billion in the third quarter of 2025 (Q3 ’25)—down from $5.8 billion in Q2 ’25—the services account painted a far less comforting picture. The net deficit on services widened to $4.1 billion in Q3 ’25 from $3.7 billion in the preceding quarter.
Although the deficit-to-GDP ratio slightly improved to –5.3 percent from –5.6 percent in Q2 ’25, the overall trend underscores a persistent vulnerability: Nigeria continues to import far more services than it exports.
A Structural Weakness Laid Bare
For decades, Nigeria’s external earnings have leaned heavily on crude oil exports. Yet beneath the headline current account figures lies a structural imbalance that remains largely unresolved—the economy’s limited domestic capacity to provide competitive services.
The services deficit is not a new phenomenon. It reflects a long-standing dependence on foreign expertise, foreign education systems, foreign airlines, foreign insurance firms, and foreign technical service providers.
The Q3 ’25 data reinforces this pattern.
The $4.1 billion services deficit represents a significant external leakage—one that offsets gains made elsewhere in the current account. Even as oil receipts and other inflows support headline surpluses, imported services quietly erode foreign exchange buffers.
Travel: The Biggest Drain
Travel once again emerged as the largest contributor to imported services, accounting for nearly $1.7 billion—or about 41 per cent of the total services deficit. This was slightly higher than the approximately $1.6 billion recorded in Q2 ’25.
A closer look at the travel component reveals a striking detail: personal travel dominated the outflows, accounting for $1.5 billion.
Within this category: Education-related expenses totalled $880 million, health-related travel amounted to $208 million, and other personal travel spending reached $371 million.
These figures highlight a troubling reality—Nigerians continue to seek education and medical care abroad at substantial cost to the country’s foreign reserves.
The education outflow of $880 million in a single quarter signals the scale at which families are exporting capital to pay tuition and living expenses overseas. Similarly, the $208 million spent on medical travel underscores persistent gaps in domestic healthcare infrastructure.
Interestingly, business-related travel declined to approximately $206 million from $234 million in the previous quarter, suggesting some moderation in corporate travel expenses. However, this reduction was insufficient to offset the broader surge in personal travel spending.
Transportation: Aviation Dominance By Foreign Carriers
Transportation was the second-largest contributor to imported services, exceeding $1.0 billion in Q3 ’25, up from $975 million in Q2 ’25.
A significant portion—$773 million—was attributable to air transportation.
This figure reflects Nigeria’s heavy reliance on foreign airlines for international travel. Despite being Africa’s most populous nation with one of the continent’s busiest travel corridors, Nigerian carriers command only a limited share of international routes.
Foreign airlines operating into Lagos, Abuja, and other major gateways dominate long-haul traffic, repatriating ticket revenues abroad. The result is a steady foreign exchange outflow that compounds the services deficit.
The data reinforces longstanding calls for policy measures to strengthen local aviation capacity and enhance competitiveness of domestic operators on international routes.
Insurance And Pension Services Spike
Among the most notable movements in Q3 ’25 was the sharp increase in net debits on insurance and pension services. This component rose to $317 million from $201 million in Q2 ’25.
The jump suggests increased payments to foreign insurance providers and reinsurance firms, likely tied to large-scale transactions in sectors such as energy, aviation, and infrastructure.
Nigeria’s limited reinsurance depth means that significant portions of high-value risks are ceded abroad. As a result, premium payments flow out of the country rather than being retained within the domestic financial system.
Other Business Services: The Consulting Dependency
Another substantial contributor to the services deficit was “other business services,” largely encompassing technical, professional, and trade-related consulting services.
This category consumed approximately $870 million in Q3 ’25, up from $853 million in Q2 ’25.
These payments often relate to foreign technical partners, engineering consultants, IT service providers, and management advisory firms engaged by Nigerian corporates and government agencies.
While such expertise can be critical for project execution and technology transfer, the persistent reliance signals limited domestic capacity in specialised professional services.
The Policy Imperative: Export Services Or Bleed Forex
From a macroeconomic standpoint, the services deficit represents more than just an accounting imbalance—it is a strategic challenge.
Nigeria’s external position remains vulnerable to oil price volatility. Even when oil revenues strengthen the trade balance, the services account acts as a counterweight, siphoning off hard-earned foreign exchange.
Analysts argue that sustainable improvement in the current account cannot rely solely on boosting oil or even non-oil goods exports. Instead, the country must build globally competitive service sectors.
ICT And Digital Services
Nigeria’s growing tech ecosystem offers a promising opportunity. The country has produced globally recognised startups and boasts a youthful, digitally savvy population.
With deliberate investment in broadband infrastructure, regulatory clarity, and export-oriented digital policy frameworks, ICT services could evolve into a major foreign exchange earner.
Healthcare Services
The $208 million spent on medical travel in one quarter alone signals untapped domestic opportunity. Strategic investments in specialist hospitals, medical training, and diagnostic infrastructure could reduce outbound health spending and even attract regional medical tourism inflows.
Creative Industries
Nigeria’s creative economy— film, music, fashion, and digital content—already commands global attention. With structured export promotion, intellectual property enforcement, and access to financing, the sector could significantly contribute to services exports.
Beyond Oil: Rebalancing The External Sector
The modest decline in the services deficit as a percentage of GDP—from –5.6 percent to –5.3 percent—offers little comfort. In absolute dollar terms, the deficit widened.
The implication is clear: Nigeria’s economic transformation agenda must prioritise service-sector competitiveness as urgently as it addresses industrialisation and agriculture.
Failure to do so means continued foreign exchange pressure, even during periods of favourable oil earnings.
As policymakers chart the next phase of reform, the services account may prove to be the silent battleground for Nigeria’s external sustainability.
The CBN’s latest data serves as both warning and opportunity. The warning is that structural weaknesses persist. The opportunity lies in leveraging Nigeria’s human capital, entrepreneurial dynamism, and digital momentum to build export-ready service industries.
Until that shift occurs, the services deficit will remain a stubborn drag on the nation’s external balance—quietly draining billions from the economy each quarter.
