The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso’s reforms in the nation’s financial landscape has no doubt started to yield results even as he was bold to tell the world during the recently concluded World Bank/International Monetary Fund (IMF) spring meetings in USA. DAVID AGBA reports.
Nigeria’s financial sector has been battling several fiscal and monetary challenges that appear to be defying any form of solution.
Resilience and growth
In the last 10 years, Nigeria’s financial sector has shown resilience and growth, particularly in areas like financial inclusion and digitalization. However, the sector also faces challenges related to economic growth, financial stability, and regulatory compliance.
Key Developments:
Financial inclusion has seen significant progress, with the proportion of adults with accounts in financial institutions increasing from 30% to 45% between 2010 and 2020. This trend continues, with formal financial inclusion reaching 64% in 2023, while informal financial inclusion has seen a slight decline.
The growth of the digital economy has been a major driver, with value added in IT services growing at 8% annually between 2000 and 2022. This has led to a surge in digital payments and financial services, particularly through mobile banking and fintech companies.
The banking industry has remained relatively resilient, with growth in capital and assets at 11% and 17% CAGR respectively. However, there have been challenges related to non-performing loans and regulatory compliance.
The Nigerian stock market has been active, with high performance ratings and a steady increase in margin loans to customers.
While the financial sector has contributed to economic growth, recent low levels of economic expansion raise questions about the sector’s role in promoting overall output growth.
The Central Bank of Nigeria (CBN) has implemented various reforms to strengthen the financial system, including recapitalization programs and interventions to support key sectors.
Positive trajectory
Overall, Nigeria’s financial sector has shown a positive trajectory in terms of inclusion and digitalization, but further efforts are needed to address challenges related to financial capability, economic growth, and regulatory compliance.
Speaking at the conclusion of the 2025 Spring Meetings of the International Monetary Fund (IMF) and the World Bank Group in Washington D.C. weekend, Cardoso attributed these positive developments to the government’s steadfast commitment to reforms and greater policy clarity.
According to him, the naira has stabilised at a more sustainable level, with the gap between the official and parallel market exchange rates disappearing, thanks to disciplined reforms undertaken by the Central Bank of Nigeria (CBN).
Disciplined reforms
“Again, thanks to disciplined reforms and policy clarity, the naira has stabilised at a more sustainable level against the U.S. dollar. The once-wide gap between the official and parallel market rates has all but disappeared, a first in Nigeria’s recent history, and speculative arbitrage has all but vanished,” Cardoso said, noting that the measures implemented have significantly curtailed market distortions.
On Friday, the naira strengthened against the dollar across various segments of the foreign exchange (FX) markets, a development bolstered by improved liquidity conditions. This progress mirrored the recent assessment by the World Bank, which affirmed the growing stability of Nigeria’s local currency.
At the Nigerian Foreign Exchange Market (NFEM), the naira closed the trading week steady at N1,599.54, concluding four days of trading, according to data from the CBN. This figure represented a slight improvement from the previous week’s closing rate of N1,599.79. Similarly, in the parallel market, commonly known as the black market, the naira also remained stable, closing at N1,605 on Friday, a rate that had been consistently maintained since Wednesday.
Renewed currency stability
Cardoso explained that this renewed currency stability has played a critical role in restoring investor confidence and encouraging autonomous inflows through formal financial channels. He stressed that these inflows are helping to diversify Nigeria’s foreign exchange sources beyond the traditional reliance on oil revenues.
“Nigeria’s external buffers have also strengthened considerably,” he added. “Our foreign reserves now exceed $38 billion, providing nearly 10 months of import cover. This robust buffer enables us to better withstand external shocks whether from declining oil prices or global financial turbulence thereby safeguarding our economy.”
Highlighting the improvement in Nigeria’s external accounts, Cardoso noted that in 2024, the country recorded a balance of payment surplus of $6.83 billion, marking the strongest performance in many years. This achievement, he said, was driven by rising exports and renewed capital inflows. At the same time, efforts to bolster the financial sector are gaining traction. He said that the banking sector recapitalisation exercise is progressing well, with strong momentum and the backing of key stakeholders, which will ensure that Nigerian banks are better equipped to support the real economy with greater scale, stability, and capacity.
Support from development partners
Cardoso also noted that Nigeria’s reform trajectory received broad support from development partners, adding that feedback from global investors and the Nigerian diaspora has been overwhelmingly positive, reflecting growing confidence in the country’s economic direction.
“Nigeria is increasingly recognised as a rising economic force, admired for the resolve shown in implementing difficult but necessary reforms,” he said. “These achievements, while encouraging, only strengthen our resolve to press forward. We will not be complacent. Instead, we will redouble our efforts to ensure these positive trends are sustained.”
Of importance is the fact that some economic experts have weighed in on the speech by the apex bank’s governor, where he pledged that CBN would prioritize reducing inflation to single digit over the medium term.
Need to tame inflation
His remarks come against the backdrop of alarming inflation data. Nigeria’s headline inflation rate surged to 24.23 per cent in March 2025, up from 23.18 per cent in February, according to the National Bureau of Statistics (NBS).
Dr. Ayo Teriba, CEO of Economic Associates, noted: “Without coordinated fiscal and structural reforms alongside monetary policy, inflation will remain stubborn. The Central Bank’s intention is commendable, but success depends on holistic action across government sectors.”
Similarly, Professor Sarah Obasi of the University of Lagos warned that supply-side constraints must be addressed urgently. “Nigeria’s inflation is largely cost-push, driven by supply bottlenecks and insecurity in food-producing regions. If these factors persist, single-digit inflation may remain a distant dream,” she said.
Endorsement from international community
On his part, while speaking to journalists on the outcomes of the Spring Meetings, Minister of Finance and Coordinating Minister of the Economy, Wale Edun, underscored the strong endorsement Nigeria’s reforms have received from the international community.
He said that the reforms are widely viewed as the most credible pathway to achieving lasting economic prosperity.
Edun disclosed that the U.S. State Department described Nigeria’s reform efforts as an ‘economic miracle,’ a recognition of the scale and impact of the changes being implemented.
Global appetite for investment in Nigeria
He highlighted that there is currently a strong global appetite for investments in Nigeria, noting that the International Finance Corporation’s (IFC) continued investments in the country serve as a strong signal that would likely attract even more investors to the Nigerian private sector. Edun stressed that fiscal consolidation remains a critical element of Nigeria’s policy framework at this time, aimed at ensuring macroeconomic stability and sustainable growth.
He pointed out that Nigeria fully aligns with the overarching theme of the 2025 World Bank Group/IMF Spring Meetings, which is that job creation is the surest pathway to poverty reduction and the improvement of livelihoods. According to him, discussions at the meetings also revealed key areas of interest for future collaboration, particularly U.S. interest in investments in Nigeria’s natural gas sector, with a specific focus on the Nigeria-Morocco Gas Pipeline project.
Edun emphasized the government’s commitment to fostering economic growth and job creation, outlining an ambitious target: achieving 7 per cent economic growth through strategic investments in infrastructure, particularly in digital connectivity, data access, and fibre optic networks.
In January 2025, the NBS updated the CPI base year from 2009 to 2024, aligning inflation figures with current household spending patterns.
This rebasing initially showed moderation: January’s inflation eased to 24.48 per cent from 34.80 per cent in December 2024, and dropped further to 23.18 per cent in February before edging back up to 24.23 per cent in March.