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X-RAYING CARDOSO’S IMPACTFUL GAINS AT CBN

CapitalTimesNews / 1 month
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6 min read

By Okanga Agila In the not-so-distant past, Nigeria’s economy was a fragile patient, clinging to life support. The symptoms were all too familiar: hunger, deprivation, and a crippling sense of hopelessness. But then, something changed. A new leadership emerged with a bold vision for a prosperous Nigeria. President Bola Ahmed Tinubu’s administration was determined to break the cycle of economic instability, and they started by making some tough decisions. One of those decisions was the appointment of Dr. Olayemi Cardoso as the Governor of the Central Bank of Nigeria. Dr. Cardoso was a man on a mission, armed with a deep understanding of the economy and a passion for reform. With Dr. Cardoso at the helm, the Central Bank began to implement a series of innovative policies, designed to stimulate growth, create jobs, and empower Nigerian citizens. It wasn’t easy, of course – there were obstacles to overcome, and tough choices to make. But Dr. Cardoso and his team were undeterred, driven by a shared vision of a brighter future for Nigeria. And then, something remarkable happened. The economy began to stir, like a sleeping giant awakening from a deep slumber. Infrastructure projects sprouted up across the country, creating jobs and opportunities for thousands of Nigerians. The education and healthcare sectors received a much-needed boost, giving citizens access to quality services and a chance to build a better life. Dr. Cardoso’s bold move to tackle Nigeria’s inflation problem began with a deliberate attempt to rectify the negative effects of past monetary policies. By holding down excessive money supply, considered a major driver of inflation, Dr. Cardoso introduced measures that would eventually lead to a decrease in prices of goods and services. The initial impact of these measures was a short-term shock, marked by an increase in interest rates, reduced spending and investment, and a decrease in demand for goods and services. Banks also played their part by mopping up excess liquidity from the system, increasing the Monetary Policy Rate (MPR) by 50 basis points. However, the long-term effects of Dr. Cardoso’s measures have been remarkable. Prices of goods and services, especially food items, have consistently fallen, leading to an improvement in the standard of living and a rapid decline in poverty and hardship. The impact is clear: inflation has begun to decline. After a rise from 2022 to 2024, the inflation rate dropped to 24.48% in January 2025 from 32.49% in December 2024. Food inflation, which accounts for about 50% of Nigeria’s inflation, dropped from 39.84% to 26.08% year-on-year in January. This decrease led to a sharp drop in food prices. For example, beans went from over N11,000 to N8,000, and garri decreased from over N4,000 to between N2,000 and N1,500. Cardoso introduced the Inflation-Targeting framework, which brought sweeping changes to stabilize prices, reduce currency volatility, and boost economic growth. His policies increased investor confidence, attracted foreign investments, and positively impacted businesses. Dr. Cardoso also achieved Nigeria’s delisting from the FATF Grey List through transparent market stabilization measures. He introduced new guidelines for dormant accounts, suspended processing fees on cash deposits, and implemented the Early Warning Systems to further consolidate these gains. Dr. Cardoso’s expertise and fiscal discipline transformed the forex market. By streamlining operations into a single framework, he brought stability, increased liquidity, and reduced market distortions. To promote economic management and coordination, Dr. Cardoso cleared 57 backlogged forex requests, reduced volatility, and increased external reserves. He also strengthened monetary-fiscal coordination through the Fiscal and Monetary Policy Coordination Framework (FMPCF) and the Financial Services Regulation Coordinating Committee (FSRCC). Dr. Cardoso utilized advanced tools like Dynamic Integrated Analytic Modelling (OIAMOND) and the Macro Diagnostic Framework to build a robust fiscal regime. He prioritized staff training and capacity building, enhancing their competence in key areas. His efforts led to the emergence of reliable, efficient, and customer-friendly financial institutions. Dr. Cardoso also regulated the activities of Bureau de Change operators, ensuring they complied with standard procedures and promoted national security and citizens’ well-being. Through effective control and deliberate reforms, he has brought about an outstanding level of customer protection, ensuring compliance with rules and objectivity, thereby limiting Fintech risks, fostering robust customer satisfaction and better engagement with formal financial institutions, going to the extent of enforcing sanctions on violators of unethical conducts to serve as deterrence. The introduction of several key initiatives has transformed Nigeria’s financial landscape. The unified tracking system (UCTS) and USSD verification of licensed financial institutions have enhanced transparency and security. Additionally, registering Point-of-Sales operators with the Corporate Affairs Commission (CAC) has helped curb fraudulent activities. Empowerment initiatives, such as the Women Entrepreneur Finance Initiative (We-Fi) Code and the updated National Financial Literacy Framework, have also been launched to support youths and women. These initiatives aim to improve the well-being of Nigerians, revive the agricultural and manufacturing sectors, and promote financial inclusion, business mentorship, and capacity building. This indeed is the joyous story of pains to impactful gains. Dr. Olayemi Cardoso is turning around the story of the nation’s economy and things are getting better for the citizens through the reforms that he has initiated. As the months passed, the evidence of Nigeria’s transformation has become impossible to ignore. The economy is growing, and the people are beginning to feel the benefits. A sense of hope and optimism began to spread as Nigerians from all walks of life started to believe in a brighter future. Today, Nigeria’s economy is unrecognizable from the fragile patient it once was. The country is on the move, driven by a newfound sense of purpose and determination. And at the heart of it all is a leadership that’s committed to creating a better future for all Nigerians. The story of Nigeria’s economic rebirth will be etched in history, with Dr. Olayemi Cardoso’s name forever linked to its triumph. Like a phoenix rising from the ashes, the nation has emerged stronger, more resilient, and poised for greatness. Dr. Cardoso’s leadership has been the catalyst for this transformation, igniting a fire of hope that will continue to burn bright for generations to come.

CBN: NAVIGATING THE PROCESS FOR MONETARY STABILITY

CapitalTimesNews / 3 months
0
6 min read

By IBRAHIM MODIBBO.Ph.D The 2025 Monetary Policy Forum, declared open by the Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, reinforces the apex bank’s price stability and macro-economic reforms. The theme: “Managing the disinflation process” resonates with the nation’s current economic realities, where inflationary pressures persist amid global and domestic shocks. The governor’s remarks reflect a balanced mix of optimism, pragmatism, and a forward-looking approach to monetary policy.His speech emphasizes the CBN’s strategic measures in taming inflation, restoring foreign exchange stability, and implementing financial sector reforms that position Nigeria for sustainable economic growth. Cardoso framed the forum as an essential intellectual platform for examining monetary policy challenges with precision. Unlike broader economic conferences, this event fosters evidence based discussions that shape policy direction. In emphasizing the need for clear communication, he acknowledges the critical role of transparency and stakeholder engagement in building confidence in monetary policy decisions. This emphasis on dialogue is significant, particularly as monetary policy remains a powerful yet complex tool requiring careful calibration. A major takeaway from the governor’s speech is his review of the economic landscape over the past year. Nigeria has faced persistent inflationary pressures, driven by both structural challenges and monetary dynamics. As at December 2024, headline inflation stood at 34.80% with core inflation, remaining a major concern despite some moderation in food inflation. The governor rightly points to domestic structural bottlenecks, exchange rate pass through effects, and energy price adjustments as factors exacerbating inflationary trends.While acknowledging these supply-side constraints, he also recognizes the role of past liquidity injections in fueling demand driven inflation. This candid assessment is crucial in understanding Nigeria’s inflationary progression, as it highlights the multifaceted nature of the challenge. The governor’s remarks on liquidity injections and their unintended consequences reflect an awareness of policy trade-offs. He notes that unorthodox monetary interventions, particularly in response to the COVID-19 pandemic, led to an excess liquidity overhang that did not translate into productive growth. The resulting inflationary pressures and exchange rate volatility necessitated a shift towards a more disciplined and coordinated monetary policy approach. This shift is evident in the Monetary Policy Committee’s (MPC) tightening cycle, which saw the Monetary Policy Rate (MPR) rise by a cumulative 875 basis points to 27.50% in 2024. Similarly, the Cash Reserve Ratio (CRR) for Other Depository Corporations (ODCs) was raised by 1,750 basis points to 50.00%, a bold move aimed at mopping up excess liquidity. These decisive interventions, the governor argues, were necessary to prevent inflation from spiralling further. Counter-factual estimates suggest that without such measures, inflation could have surged to 42.81% by the end of 2024. This assertion stresses the importance of proactive policy responses in mitigating economic distortions. The commitment to tightening reflects the CBN’s resolve to anchor inflation expectations while ensuring that monetary policy remains an effective tool for economic stability. Beyond inflation control, the CBN has implemented critical financial sector reforms to strengthen Nigeria’s economic resilience. The unification of multiple exchange rate windows has improved efficiency in the foreign exchange market, leading to a notable increase in remittances through International Money Transfer Operators (IMTOs). The governor cites a 79.44% rise in remittances to 4.18 billion in the first three quarters of 2024, compared to 2.33 billion in the same period of 2023. This reform, alongside the clearance of a $7.0 billion backlog of FX commitments, has bolstered market confidence and enhanced liquidity with rising external reserves of $ 40 billion as of Decembe 2024. Another significant policy shift is the lifting of restrictions on 41 items previously banned from accessing the official FX market. The reversal of this 2015 policy signals a more market-driven approach aimed at improving supply side dynamics.Additionally, the introduction of new minimum capital requirements for banks, effective by March 2026, is a forward-thinking measure designed to strengthen the financial system’s resilience. By ensuring that banks are adequately capitalized, this policy aligns with Nigeria’s ambition of becoming a 1 trillion economy, reinforcing the stability and global competitiveness of the banking sector.The governor also showcases the launch of the Women’s Financial Inclusion Initiative (WIFI) under the National Financial Inclusion Strategy. This initiative addresses gender disparities in financial access, empowering women through digital tools, education, and financial services. Inclusive finance remains a key pillar of sustainable economic development, and the CBN’s focus on bridging financial gaps reflects a broader commitment to equitable growth. In a further effort to instill transparency and efficiency in the FX market, the CBN recently introduced the Nigeria Foreign Exchange Code. This framework, built on six core principles, aims to enhance integrity, fairness, and trust within the financial ecosystem. Such measures are essential in attracting foreign investment and maintaining confidence in Nigeria’s economic reforms. Cardoso’s speech also contextualizes Nigeria’s disinflation efforts within the global monetary landscape. He acknowledges emerging optimism regarding potential improvements in capital flows to emerging markets, particularly as advanced economies transition toward monetary easing. However, he cautions that Nigeria’s ability to attract these inflows hinges on investor confidence in domestic reforms. The need to deliver positive real returns on investment accentuates the importance of maintaining macroeconomic stability and ensuring that inflationary trends do not erode gains. Looking ahead, the governor stresses that the shift from unorthodox to orthodox monetary policy is crucial for restoring confidence and strengthening policy credibility. Encouragingly, early signs of progress are evident. FX liquidity is improving, and the naira is gradually aligning with market fundamentals, creating a more predictable environment for economic activities. While acknowledging that challenges remain, Cardoso expresses confidence that Nigeria’s policies are setting the stage for sustainable economic stability. The call for collaboration is another vital point in his remarks. Managing disinflation requires coordinated efforts between monetary and fiscal authorities, alongside active engagement with the private sector and civil society. This alignment is necessary to anchor inflation expectations, maintain investor confidence, and ensure that economic policies translate into tangible benefits for Nigerians.The governor reiterated the importance of a forward-looking, adaptive, and resilient monetary policy framework. By prioritizing price stability, financial sector resilience, and macro-economic

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