Nigeria’s international trade through Letters of Credit (LC) grew by 4.4% year-on-year to $269.83 million in the first four months of 2025, up from $258.46 million in the same period last year, according to new data from the Central Bank of Nigeria (CBN).
Letters of Credit are financial instruments issued by banks to guarantee payment for imports once goods have been shipped. For years, Nigerian importers struggled to secure LCs due to foreign banks’ reluctance, stemming from Nigeria’s weak external reserves. This often forced importers to make full advance payments before goods were dispatched.
However, the CBN data suggests renewed confidence in Nigeria’s foreign exchange position, driven by a steady increase in the country’s net foreign reserves since the beginning of the year.
Despite the overall year-on-year rise, monthly data revealed fluctuating transaction volumes. LC transactions surged by 48% month-on-month in February to $95.6 million from $64.55 million in January. But in March, they plunged by 54.4% to $43.53 million, before rebounding by 47.7% to $64.3 million in April 2025.
The improved performance in LC usage reflects Nigeria’s gradual return to global trade norms and increased credibility in the eyes of foreign trading partners.
