Why Nigeria’s rising reserves matter and where Mustapha Chike-Obi’s argument falls short

On 18 October 2026, TheCable reported comments by Mustafa Chike-Obi questioning the economic benefits and financial costs of maintaining Nigeria’s growing external reserves.

His central argument was that Nigeria’s reserves, then estimated at $52–$53 billion, were costing the country more than $10 billion annually because the foreign assets earned approximately 3%, while the naira used to finance them attracted an estimated 20% interest cost.

He also said foreign reserves alone are not economic prosperity and that average Nigerians are not better off.

According to data presented in the International Monetary Fund’s 2026 Article IV report, Nigeria’s gross external reserves stood at approximately $33.2 billion at the end of 2023, rising to $40.2 billion in 2024 and $45.8 billion at the end of 2025.

By 28 October 2026, the CBN’s published reserve series had reached approximately $55.26 billion.

First, Nigeria’s trade and current-account positions have improved. The IMF reported a current-account surplus equivalent to 4.8% of GDP ($13.944 billion) in 2025, supported by oil and gas exports and lower refined-petroleum imports as domestic refining expanded. In Q2 2026, the CBN recorded a $7.54 billion surplus. Like a household earning more while buying less from abroad, Nigeria’s external position improves when exports rise and import demand falls.

Second, remittances have strengthened foreign exchange supply. CBN balance-of-payments figures put personal transfers at approximately $5.82 billion in Q2 2026. They do not automatically become CBN reserves but increase dollar availability and may ease naira pressure.

Third, foreign portfolio investments and borrowing have contributed. The IMF identified approximately $6 billion in net purchases of CBN OMO instruments by non-resident investors in 2025, alongside a $2.3 billion Eurobond issuance. These flows support FX supply but carry risks, OMO holdings can reverse, while Eurobonds require debt service.

Reserve growth therefore reflects external earnings, lower import requirements, financial inflows and borrowing, not one source. A current-account surplus does not automatically become central-bank reserves, the eventual impact depends on who receives the foreign exchange and whether the CBN acquires it.

The CBN can acquire FX from oil receipts or market purchases, creating corresponding naira liquidity. Whether that liquidity subsequently requires interest-bearing sterilisation depends on monetary conditions and policy choices.

But that does not establish that every dollar in the entire $55 billion reserve portfolio carries the same funding cost. The relevant calculation must consider the actual stock of interest-bearing liabilities, applicable rates, reserve investment earnings and other associated costs.

Seventeen percent of $52 billion is approximately $8.84 billion, At $53 billion, it’s $9.01 billion. These are hypothetical interest-rate-spread calculations, not demonstrated annual losses recorded by the CBN. But the actual cost must be established through analysing the CBN’s balance sheet and financing arrangements, not inferred by applying a single interest-rate differential to every dollar of gross reserves.

Foreign reserves are not primarily accumulated to maximise investment returns. The CBN’s statutory responsibility includes maintaining external reserves to safeguard the international value of the naira. This is an insurance function. However, I believe Chike-Obi’s View Is Important the CBN must remain Accountable.

The IMF estimated that Nigeria’s gross reserves at the end of 2025 stood at approximately 157% of its reserve-adequacy metric, above the conventional 100–150% range considered broadly adequate for precautionary purposes.

Questions about the marginal benefit of additional reserves are therefore reasonable. The IMF’s 2026 assessment noted that approximately $8 billion in reserve assets pledged under a securities-lending arrangement at the end of 2025 would be excluded under its reserve definition.

Consequently, the difference between the CBN’s published gross reserves and fully available, unencumbered external assets deserves closer examination.

Nigeria’s challenge is not simply deciding whether $55 billion is too much or too little. The country should progressively reduce its dependence on expensive short-term portfolio capital while expanding foreign exchange earnings from non-oil exports, manufactured goods, services and competitively priced energy products.

I believe Mustafa Chike-Obi has raised a worthwhile question about the economic costs of maintaining large foreign reserves. However, his reported $10 billion annual cost estimate is not established by the arithmetic or by the financing assumptions presented, and the average Nigerian can never be better off if reserves are low.

More importantly, the argument risks understating the economic value of rebuilding external liquidity after years of foreign exchange instability. Nigeria’s recent reserve growth should neither be celebrated without scrutiny nor dismissed as an expensive accounting exercise. It’s a key sign of monetary policy competence.

Benjamin Awokumaka (Ben Awoks) is the Founder & Managing Consultant of Awoks Consulting, a multidisciplinary advisory and venture building firm specialising in management consulting, financial advisory, compliance and cybersecurity.

He has supported businesses in generating millions in cumulative revenue and actively contributes to economic policy discourse, advocating for market-driven reforms, industrialisation and sustainable economic growth in Nigeria.

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Notify me of follow-up comments by email.

Access Holdings’ 9M 2026 Results: Building a stronger foundation for sustainable shareholder returns

Why Nigeria must rethink the hybrid Excise Stamp policy

Foreign governments are blocking japa, Nigeria must now give its talent a reason to stay