- CBN governor Olayemi Cardoso said the bank is committed to economic stability, curbing inflation, among others
- He said the one-year-old management of the CBN inherited economic challenges
- The bank’s reforms are anchored on its IMPACT strategy
The governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has reiterated the apex bank’s commitment to stabilising the economy, curbing inflation and restoring investor confidence.
According to a statement from the CBN, Cardoso stated this in his keynote address at a symposium on economic reforms and the unveiling of the compendium, ‘Promoting Stability in an Era of Economic Reforms: The Journey So Far,’ in Abuja on Thursday, to mark the first anniversary of the bank’s management team.
Cardoso outlined the milestones achieved by the bank in its ongoing economic reform agenda, including a new target to increase foreign remittances to $1 billion monthly.
Cardoso said the past year has been one of the bank’s most challenging yet transformational, as it has been able to address the credibility deficit it faced.
The statement read, “According to Governor Cardoso, the reforms had started to yield positive results, including marked improvements in the FX market and a stabilisation of foreign reserves, which have now surpassed the $ 40 billion mark, the highest in 33 months.
“While noting that inflation remained elevated, he said it was on a downward trend, signalling that the reforms were taking hold in restoring market equilibrium and fostering growth.”
‘We inherited economic challenges,’ Cardoso claims
The CBN helmsman noted that the bank’s management team inherited economic challenges, such as the slowdown in the growth of the Gross Domestic Product (GDP) to 2.31 per cent in the first quarter (Q1) of 2023, a significant decline from earlier years and a sharp rise in inflation to 24.1 per cent by mid-2023.
Cardoso, however, said the CBN confronted these pressures with a robust policy response in the past 12 months, prioritising measures to enhance stability in the foreign exchange (forex) market, improve monetary policy and curb inflation.
To address the parity between the official and parallel forex market rates, the CBN floated the naira in June 2023, allowing market forces to determine the currency’s value on a willing-buyer-willing-seller model.
Cardoso said the multiple exchange rate windows encouraged arbitrage, reduced foreign investment and led to a backlog in forex settlements with revenue losses estimated at N6.2 trillion in 2022 alone.
The bank also adopted a tightening stance to its monetary policy with the aim of curbing inflation, which soared to a new 28-year all-time high of 34.19 per cent in June. It, however, tapered in July after 19 months, declining to 33.40 per cent. The rate declined further for the second consecutive month in August to 32.15 per cent before increasing to 32.70 per cent in September 2024.
The CBN recalibrated the Monetary Policy Rate (MPR), raising it by 850 basis points to 27.25 per cent in September. The Cash Reserve Ratio for commercial banks was also increased to 50 per cent.
Cardoso said these adjustments were critical to addressing inflationary pressures and fostering a stable economic environment.
He said the fiscal deficit, highlighted by the impact of the Ways and Means Advances by the CBN, which reached N22.7 trillion by mid-2023, necessitated urgent action.
The CBN governor also noted the country’s capital importation challenges, with foreign direct investments and portfolio investments dropping over the past decade.
CBN’s IMPACT strategy
Cardoso noted that the bank's reforms under its 2024-2028 Corporate Strategy are branded with the values of Integrity, Meritocracy, Professionalism, Accountability, Courage, and Tenacity (IMPACT).
As part of this strategy, he said the bank moved away from quasi-fiscal interventions and was committed to orthodox monetary policies and streamlined FX windows to restore market confidence.
He said the CBN had also implemented new Bureau de Change (BDC) operations guidelines to enhance regulation and minimise forex market disruptions.
Cardoso also highlighted the bank’s drive to improve internal efficiency, leveraging a ‘Digital-First Initiative’ that has automated key processes, reduced operational costs and introduced data-driven tools for effective policy-making.
5 policies that defined Olayemi Cardoso’s one year in office
Meanwhile, TheRadar reported that Olayemi Cardoso recently marked one year as the governor of the Central Bank of Nigeria (CBN).
The one-year period is characterised by five major policies, which include the bank recapitalisation exercise, clearing of forex backlog and lifting of forex restriction on 43 items.
