Nigeria’s Foreign Reserves Are Not a Piggy Bank

Nigeria’s foreign reserves have risen sharply, but that does not make them a government cash account ready to fund any project, the article argues.

Central Bank of Nigeria Governor Olayemi Cardoso told the BusinessDay CEO Forum in Lagos that net external reserves had grown from roughly $3 billion before September 2023 to about $40 billion in July 2026. Gross reserves had reached around $52 billion, providing approximately 10 months of import cover.

Cardoso presented the increase as evidence that three years of difficult reforms were producing results. Foreign-exchange liquidity had improved, external protection had strengthened and investor confidence was returning. But the announcement also prompted a pointed public response. Some commentators argued that the reserves showed authorities were holding idle cash while Nigerians faced hardship. They asked why Nigeria continued to borrow and why major development programs remained unfunded.

The article says that concern is legitimate, but warns against treating reserves as money that can simply be spent. Foreign-exchange reserves are external assets managed by the central bank. They include foreign-currency deposits, government securities, gold, Special Drawing Rights and Nigeria’s reserve position at the International Monetary Fund. They appear on the CBN’s balance sheet and have corresponding liabilities.

That means the funds cannot be transferred to the budget or distributed through the Federation Account without consequences. Reserves build when foreign exchange enters the country through oil receipts, non-oil exports, diaspora remittances, portfolio investment and other capital inflows. The central bank buys some of those dollars in exchange for naira, adding the dollars to official reserves while the matching naira enters the domestic financial system.

The central argument is therefore a distinction between a stronger external buffer and freely available fiscal revenue. Calls for Cardoso to spend the reserves, the article says, miss what the reserves are designed to do.