No Retreat on Naira for Crude Oil Transactions, Says Finance Minister

By Zara Maisango 

LAGOS, May 11, 2025 – The Federal Government of Nigeria has doubled down on its transformative policy to conduct all crude oil and refined product sales in naira, a move heralded as a bold step toward economic sovereignty. Speaking at a high-level stakeholders’ meeting in Abuja, the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, declared that there is “no turning back” on this initiative, which seeks to unshackle Nigeria from its longstanding reliance on foreign currencies, particularly the U.S. dollar, in its oil trade.

The policy, first announced in late 2024, is being spearheaded by the Technical Sub-Committee on Crude and Refined Product Sales in Naira, a specialized body tasked with ensuring a seamless transition. Edun, addressing representatives from the Nigerian National Petroleum Company Limited (NNPCL), the Central Bank of Nigeria (CBN), and international oil companies, underscored the government’s unwavering commitment to the initiative. “This is not just a policy shift; it is a declaration of economic independence,” he said. “By transacting in our local currency, we are taking control of our economic destiny and insulating our nation from the volatility of global foreign exchange markets.”

The decision to denominate crude oil sales in naira comes against the backdrop of Nigeria’s chronic foreign exchange challenges, which have constrained economic growth and fueled inflation. For decades, the country’s dependence on dollar-based transactions for its primary export—crude oil—has exposed it to external shocks, including fluctuating exchange rates and dwindling foreign reserves. In 2024, Nigeria’s foreign reserves dipped to a six-year low of $32 billion, prompting urgent calls for reforms to stabilize the economy.

The naira-based transaction framework is expected to have far-reaching implications. By reducing the demand for dollars in the oil sector, the policy aims to ease pressure on the naira, which has depreciated significantly in recent years. Economists project that the move could save Nigeria up to $10 billion annually in foreign exchange outflows, funds that could be redirected to critical sectors like infrastructure, healthcare, and education. “This is a game-changer,” said Dr. Amina Yusuf, an economist at the Lagos-based Centre for Economic Policy Analysis. “It’s not just about saving dollars; it’s about building confidence in the naira and fostering a more resilient economy.”

The implementation process, however, is not without challenges. The Technical Sub-Committee has been working tirelessly to address logistical and regulatory hurdles, including establishing a robust pricing mechanism for crude oil in naira and ensuring compliance from international buyers. Sources close to the committee revealed that negotiations with major oil trading partners, including China and India, Nigeria’s largest crude oil buyers, are ongoing to secure their buy-in. “The global oil market is complex, and transitioning to naira-based sales requires meticulous planning,” said a senior official at the NNPCL, who requested anonymity. “But the political will is there, and we’re making progress.”

To support the policy, the CBN has introduced measures to bolster liquidity in the naira market, including tightening controls on illicit dollar flows and expanding access to naira-denominated credit for local refiners. The Dangote Refinery, Africa’s largest single-train refinery, has emerged as a key player in the initiative, with plans to procure crude oil exclusively in naira for its operations. “This policy aligns perfectly with our vision of adding value locally and reducing import dependence,” said a spokesperson for the refinery.

Public reactions to the policy have been mixed. While many Nigerians applaud the government’s bold vision, others express skepticism about its feasibility. “The idea is great, but can we trust the system to deliver?” asked Chinedu Okeke, a trader in Lagos. “The naira’s value is still shaky, and we need guarantees that this won’t lead to higher fuel prices.” To address such concerns, Edun assured Nigerians that the government is committed to stabilizing the naira and ensuring that the policy does not exacerbate inflationary pressures.

The Finance Minister also highlighted the broader implications of the policy for Nigeria’s economic diversification efforts. By prioritizing naira transactions, the government aims to stimulate local industries, particularly in the downstream oil sector, and reduce the country’s reliance on imported refined products. “This is about more than just oil,” Edun said. “It’s about building a Nigeria where our currency is respected, our industries thrive, and our people prosper.”

As the Technical Sub-Committee continues its work, all eyes are on the government to deliver on its promise of a stronger, more self-reliant economy. With the global oil market watching closely, Nigeria’s audacious gamble could set a precedent for other resource-rich nations seeking to reclaim control over their economic futures. For now, the message from Abuja is clear: the naira is here to stay, and there’s no turning back.