The Central Bank of Nigeria (CBN) has reviewed upwards the fees charged on Automated Teller Machine (ATM) withdrawals effective March 1.
In a circular, CBN Acting Director, Financial Policy & Regulation Department, John Onojah, explained that the revised charges will address increasing operational costs and enhance the efficiency of banking services.
Under the new rules, customers withdrawing from their own bank’s ATMs (on-us transactions) will continue to enjoy free withdrawals.
However, withdrawals from on-site ATMs (ATMs located at bank branches) will incur an N100 fee per N20,000 withdrawn.
For withdrawals at ATMs belonging to other banks (Not-on-Us transactions), an N100 fee plus a surcharge of not more than N500 per N20,000 withdrawal will apply.
The CBN emphasized that the surcharge is the income of the “ATM deployer/acquirer and must be disclosed to consumers at the point of withdrawal.”
This review marks the first change in ATM transaction fees since 2019 when the CBN reduced the withdrawal fee from N65 to N35.
According to the CBN, the updated fees are in line with Section 10.7 of the ‘CBN Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions (2020).’
The statement reads, “In response to rising costs and the need to improve the efficiency of Automated Teller Machine (ATM) services in the banking industry, the Central Bank of Nigeria (CBN) has reviewed the ATM transaction fees prescribed in Section 10.7 of the extant CBN Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions, 2020 (the Guide).”
“This review is expected to accelerate the deployment of ATMs and ensure that appropriate charges are applied by financial institutions to consumers of the service,” the CBN added.
For international withdrawals using debit or credit cards, banks, and financial institutions are now allowed to charge a “cost-recovery charge equivalent to the exact amount charged by the international acquirer.”
Additionally, the CBN stated that the three free monthly withdrawals for Remote-On-Us (other bank’s customers/Not-On-Us consumers) will no longer apply under Section 10.6.2 of the Guide.
The apex bank has urged all financial institutions to ensure compliance with the new guidelines before the March 1, implementation date.
The Central Bank of Nigeria (CBN) yesterday shifted the 299th meeting of its Monetary Policy Committee (MPC) earlier scheduled for February 17 and 18, to Wednesday, February 19 and Thursday, February 20, 2025.
In a statement, the apex bank said the announcement puts paid to speculations around the date of the meetings amidst delays by the National Bureau of Statistics (NBS) to release the rebased Consumer Price Index (CPI).
“With a date now fixed, the attention of economic watchers is focused on the CBN’s MPC to ascertain if there will be a hold or hike in the monetary policy rate (MPR), going by current trends,” it said.
The last MPC meeting held in November 2024 saw the committee members raising interest rate by 25 basis points to 27.50 per cen.
The benchmark interest rate was previously pegged at 27.25 per cent in September 2024.
The Governor of CBN, Olayemi Cardoso, said: “The Committee was unanimous in its agreement to raise the monetary policy rate by 25 basis points to 27.50 per cent”.
Cardoso noted that the decision to raise the country’s Monetary Policy Rate is to tackle inflation and boost exchange rate stability.
The Central Bank of Nigeria (CBN) yesterday extended the $25,000 weekly sale to Bureaux De Change (BDCs) at the Nigeria Foreign Exchange Market (NFEM) by four months ending May 30.
In a statement, CBN Acting Director, Trade and Exchange Department, W.J Kanya, said the expiry date for the dollar sales, which was initially designed to end January 31, will now elapse on May 30.
The sale of dollars to BDCs at the official market rate was to enable the operators meet expected seasonal demand for foreign exchange.
The earlier circular said, the apex bank was allowing a temporary access for all existing BDCs to the NFEM for the purchase of FX from Authorised Dealers, subject to a weekly cap of USD 25,000.00, adding that the window will be open between December 19, 2024 to January 30, 2025.
“BDC operators can purchase FX under this arrangement from only one Authorized Dealer of their choice and will be required to fully fund their account before accessing the market at the prevailing NFEM rate. All transactions with BDCs should be reported to the Trade and Exchange department, and a maximum spread of one per cent is allowed on the pricing offered by BDCs to retail end-users.
“The general public is also reminded of the continued availability of PTA/BTA from their banks to meet their personal and business travel requirements, and that all legitimate and eligible foreign exchange transactions are expected to be complete in the NFEM, at the market determined exchange rate,” the apex bank said.
It said the CBN remained committed to a fully functional foreign exchange market and will continue to provide liquidity when necessary to manage price volatility Please be guided accordingly.
Reacting, President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, lauded the CBN for the lifting of the suspension of sales of interbank FX to BDCs at the official market.
He said the move is part of the CBN’s determination to entrench inclusiveness of BDCs sub-sector in the forex market operations.
Gwadabe called for banks and BDCs partnership in the implementation of the dollar sales to BDCs policy framework.
He said the move will continue to entranch stability and curb volatility in forex market operations.
“We are delighted that the CBN have considered our members’ accessibility to the New EFEMS Market through the banks. This development is a testament of the CBN’s recognition of our third level roles in the foreign exchange market architecture,” he said.
Gwadabe listed some of the benefits of the new policy as improved forex liquidity in the market, which will have positive impact on the naira.
The Central Bank of Nigeria (CBN) has extended the temporary window that allows Bureau de Change (BDC) operators to purchase foreign exchange (FX) from authorised dealers at the Nigerian Foreign Exchange Market (NFEM).
Initially set to expire on January 31, 2025, the arrangement will now remain in place until May 30, 2025.
The decision to extend was communicated to all Bureau De Change Operators via a circular TED/FEM/PUB/FPC/001/003 by the apex bank on Monday.
The extension, the CBN said, is to ensure that BDCs can continue purchasing up to $25,000 per week, under the same terms and conditions outlined in the CBN’s earlier directive dated December 19, 2024.
The extension signals the CBN’s continued efforts to stabilise the FX market and address liquidity challenges.
The regulator emphasized its commitment to maintaining a fully functional foreign exchange system, noting that it will intervene as needed to manage price volatility.
According to a previous statement by the CBN on February 24, 2024, BDC operators can also source FX from other channels, including tourists and returnees from the diaspora, expatriates who receive foreign exchange inflows from work, travel, or investment, as well as residents with similar FX inflows through their domiciliary accounts. Other permitted sources include International Money Transfer Operators (IMTOs), embassies, and hotels that are authorized buyers of FX.
ABOUT 91 per cent of loans obtained from banks by companies are performing, the Central Bank of Nigeria (CBN) has said.
In its latest credit conditions survey released at the weekend, the CBN indicated that about nine per cent of corporate loans are non-performing, four notches above the apex bank’s regulatory guidance of five per cent.
According to the report, corporate loan default stood at nine per cent in fourth quarter 2024. It stood at 6.2 per cent in third quarter, 2.8 per cent in second quarter and 4.5 per cent in the first quarter of last year.
The CBN outlined the factors contributing to corporate credit demand to include commercial real estate, balance sheet restructuring, inventory finance, capital investments, merger and acquisition.
The apex bank said there were increased credit availability for corporate borrowers, while secured lending to households dropped.
“The demand for credit across all lending types increased in fourth quarter of last year. The factors influencing the increase for secured and unsecured household loans were consumer loans from households and credit cards lending from households respectively while inventory finance was the major factor that influenced the change in demand for corporate lending,” CBN stated.
The apex bank also noted that the demand for credit increased for all lending types during the period.
However, demand for mortgage and re-mortgage from households decreased.
“The demand for credit across all lending types increased in fourth quarter of last year when compared to the previous quarter. The overall spreads on secured and unsecured lending rates to households relative to Monetary Policy Rate (MPR) widened.
“For corporate lending, all lending type spreads on loan relative to MPR also widened, except Other Financial Corporations (OFCs) which narrowed in the current quarter,” the report stated.
The Credit Conditions Survey (CCS) reports on secured and unsecured lending to Households, Private Non-Financial Corporations (PNFCs), Small Businesses and Other Financial Corporations (OFCs). The survey was based on lenders responses, to questions from the statistics department of the CBN.
To determine the aggregate results, each lender was assigned a score based on lender’s response. Lenders who report that credit conditions have changed “a lot” are assigned twice the score of those who report that conditions have changed “a little”. These scores were then weighted by lenders credit market shares.
The results were analyzed by calculating net percentage balances, such as the difference between the weighted balances of lenders reporting that demand was higher versus those reporting that demand was lower. The net percentage balances are scaled within the range plus or minus 100.
As 2025 begins, the Central Bank of Nigeria (CBN) is gearing up to launch a robust strategy aimed at tackling inflation and restoring economic stability. This report delves into the inflation trends of 2024, exploring the key factors driving the rise in prices, and highlights the monetary and fiscal measures the CBN is implementing in 2025 to reverse the upward trend. Assistant Editor Nduka Chiejina provides an in-depth analysis
Inflation has continued to be one of Nigeria’s most pressing economic challenges, with the Consumer Price Index (CPI) experiencing a significant rise throughout 2024. The index surged from 29.90 per cent in January to 34.80 per cent in December, driven by a range of factors such as soaring food prices, foreign exchange volatility, and ongoing supply chain disruptions. The Central Bank of Nigeria (CBN), under the leadership of Governor Olayemi Cardoso, has faced considerable pressure to stabilise prices while simultaneously fostering sustainable economic growth.
The inflation figures for 2024 reflect a persistent upward trend, with inflation peaking at 34.80 percent in December. The year began with an inflation rate of 29.90 per cent in January, rising steadily to 31.70 percent in February and 33.20 percent in March. By April, inflation had reached 33.69 per cent and remained above 33 per cent throughout the following months, peaking at 34.19 per cent in June. The figures eased slightly in July and August, standing at 33.40 per cent and 32.15 per cent, respectively.
However, this brief relief proved temporary as inflation rebounded to 32.70 per cent in September, rising further to 33.88 per cent in October. By November, the inflation rate had climbed to 34.60 per cent, and it closed the year at its highest point of 34.80 per cent in December. These figures underscore the ongoing inflationary pressures throughout the year, with only short-lived periods of reprieve. The final quarter of 2024 proved particularly difficult, highlighting the continued dominance of economic factors that kept prices elevated.
Key drivers of inflation in 2024 and CBN’s strategy to tackle inflation in 2025
Several factors contributed to Nigeria’s elevated inflation rate in 2024. One of the most significant was the depreciation of the naira and the continued volatility in the foreign exchange market. The exchange rate fluctuated due to weak foreign exchange reserves and capital flight, driving up the cost of imports and pushing up prices across goods and services. Food inflation also remained a key contributor to overall inflation. Insecurity in farming regions, rising logistics costs, and climate-related disruptions all hindered food supply, resulting in higher prices. This was compounded by soaring transportation costs, driven by increased fuel prices, which further escalated food distribution expenses.
Monetary policy tightening also contributed to the inflationary pressures experienced in 2024. The Central Bank of Nigeria (CBN) adopted a stringent approach, raising the Monetary Policy Rate (MPR) multiple times throughout the year to curb excess liquidity. While this was intended to control inflation, it resulted in higher borrowing costs, which in turn slowed investment and economic growth. Additionally, the rise in energy and transportation costs played a significant role. The removal of fuel subsidies in 2023 had a lasting effect, making transportation and production more expensive. Adjustments to electricity tariffs further exacerbated the situation, as businesses were forced to pass on these additional costs to consumers, further driving up prices.
Structural weaknesses in Nigeria’s economy also contributed to the persistent inflationary pressures. The country’s heavy reliance on imports for essential goods, coupled with weak industrial capacity and inadequate infrastructure, made it particularly vulnerable to external shocks. The slow pace of economic diversification meant that disruptions in global supply chains or fluctuations in global prices had an immediate and direct impact on inflation.
In response to the urgent need to tackle inflation, the CBN has outlined a comprehensive strategy aimed at stabilising prices and restoring economic confidence in 2025. The bank is expected to prioritise stabilising the foreign exchange market to mitigate imported inflation. Strengthening foreign exchange reserves, increasing interventions in the forex market, and implementing policies to boost non-oil exports and remittance inflows are among the key strategies it plans to deploy. These efforts aim to improve forex liquidity and reduce volatility in exchange rates.
On the monetary policy front, the CBN is likely to maintain a tight stance in the early months of 2025. While this approach will help control inflation, should price pressures begin to ease, the central bank may gradually reduce interest rates to stimulate investment and foster economic growth. Effective liquidity management will remain a central priority, as the CBN seeks to balance inflation control with the need for sustainable economic expansion.
The CBN is also focused on strengthening financial sector stability to ensure that sufficient credit flows to productive sectors. Encouraging the recapitalisation of banks, enhancing consumer credit initiatives, and supporting lending to critical sectors such as manufacturing and agriculture are among the strategies to prevent economic activity from being stifled by tight monetary policy. Addressing food inflation will be a key aspect of the CBN’s 2025 strategy, with plans to increase intervention in the agriculture sector through targeted funding and incentives for farmers. Expanding modern storage and distribution networks to minimise post-harvest losses will also be prioritised. Furthermore, efforts will be made to collaborate with state governments to improve security in farming regions, ensuring that agricultural activities are not disrupted by violence or banditry.
Improving energy and infrastructure development will also be a major focus. The CBN is working closely with the federal government to boost investment in energy infrastructure, which is expected to lower production and transportation costs. The development of alternative energy sources is being explored to reduce reliance on costly fuel imports. To ensure the success of these measures, the CBN is emphasising closer coordination with the federal government on fiscal policy. This includes reducing fiscal deficits through prudent spending, implementing structural reforms to enhance productivity, and expanding social intervention programmes to protect vulnerable Nigerians from the impact of inflation. A stronger alignment between monetary and fiscal policies will be crucial in achieving sustained price stability.
CBN’s tightening measures: MPC members’ views on inflation control
As Nigeria continues to contend with persistent inflation, members of the CBN’s Monetary Policy Committee (MPC) have underscored the need for a decisive and comprehensive response. Their insights highlight the complex factors driving inflation and the necessity for coordinated efforts between monetary and fiscal authorities. A key concern raised by MPC member Aku Pauline Odinkemelu is the critical importance of government collaboration in addressing inflationary risks that extend beyond the scope of monetary policy interventions.
She emphasised that while the CBN remains committed to its efforts to contain inflation, other underlying economic challenges—such as fiscal deficits, infrastructural deficiencies, and security issues—must also be tackled to achieve lasting price stability. In her words, “In addition to efforts by monetary policy to contain the risk to price development, it is also essential that the government joins forces to address other risks to the outlook such as security challenges especially in food-producing areas, high energy costs, structural and labour market rigidities, and fiscal policy surprises.”
Her remarks highlight the limitations of monetary policy in effectively controlling inflation. Issues such as insecurity in farming regions, which disrupts food supply, and high energy costs, which drive up production expenses, require broader, more coordinated policy interventions. Labour market inefficiencies and abrupt shifts in fiscal policy further complicate efforts to control inflation, underlining the need for a whole-of-government approach.
Another MPC member, Aloysius Uche Ordu, emphasised the devastating impact of inflation on the most vulnerable segments of society. He described the ongoing cost-of-living crisis as a major source of economic hardship, particularly for low-income families, small businesses, and Nigeria’s vast informal sector. Ordu warned that “the long-term consequences of inflation, such as reduced purchasing power and increased living costs, are especially detrimental to the most vulnerable groups within the economy. Inflation erodes trust in the government, making it a critical issue that requires urgent, unified action across all levels of government.”
Ordu’s comments underscore the broader economic and social consequences of inflation. When inflation remains persistently high, it erodes household incomes, diminishes business profitability, and weakens overall economic confidence. Considering these concerns, he advocated for further tightening measures to combat inflation. In response to the mounting inflationary pressures, Ordu voted in September to raise the Monetary Policy Rate (MPR) by 50 basis points to 27.25 per cent. He also supported increasing the Cash Reserve Ratio (CRR) for Deposit Money Banks by 50 basis points to 50 per cent, and for Merchant Banks, by 200 basis points to 16 per cent. However, he favoured maintaining the asymmetric corridor and liquidity ratio at their current levels, signalling a more cautious approach to broader liquidity management.
For Muhammad Sani Abdullahi, Deputy Governor for Economic Policy at the CBN, inflation control remains the central priority of monetary policy. He stressed that, given the prevailing inflation outlook, maintaining a tight stance is crucial to anchoring inflation expectations. Abdullahi noted, “The risks to inflation in Nigeria are well known. Taming inflation therefore remains a top priority for the MPC. The policy rate needs to go higher given the inflation outlook and the need to ensure that inflation expectations remain well-anchored, which in turn supports the federal government’s broader economic growth objectives. In this context, maintaining the Bank’s tight monetary policy stance is critical to sustaining domestic price stability.” His comments emphasise the importance of ensuring that inflation expectations are managed effectively to maintain long-term economic stability.
Abdullahi’s position aligns with the CBN’s broader strategy of using interest rate hikes as a tool to curb inflationary pressures. By raising the policy rate, the central bank aims to reduce excess liquidity in the economy, which in turn helps to slow down inflation. However, this approach is not without its trade-offs. While it can be effective in managing inflation, it also leads to higher borrowing costs for businesses and individuals, potentially slowing investment and consumption. This balancing act requires careful consideration of both the short-term and long-term economic impacts.
MPC member Mustapha Akinkunmi issued a warning about potential inflationary shocks in the near term, pointing out that “the recent increases in energy costs and the flooding in September are expected to disrupt this declining trend in headline inflation.” His remarks highlight the external factors that continue to pose significant risks to inflation control efforts. The rise in fuel and electricity costs contributes to higher production and transportation expenses, while natural disasters such as flooding disrupt agricultural output, leading to food supply shortages and escalating prices.
These perspectives from MPC members offer a comprehensive view of Nigeria’s inflation dynamics and the policy responses being considered. While there is broad agreement on the necessity for monetary tightening, experts also stress the need for broader economic reforms and government interventions to address the root causes of inflation. The CBN’s decision to raise interest rates, increase reserve requirements, and maintain tight liquidity conditions demonstrates a firm commitment to tackling inflation.
However, as highlighted by policymakers, inflation control cannot rest solely on monetary policy. Addressing security challenges, high energy costs, and structural inefficiencies is equally crucial to achieving long-term price stability. As Nigeria moves forward, the effectiveness of these measures will depend on how well monetary and fiscal authorities align their policies. With inflation at record highs, the success of these interventions will be pivotal in shaping Nigeria’s economic trajectory in 2025.
Support from the fiscal authorities
As the CBN intensifies its efforts to curb inflation in 2025, the fiscal authorities have voiced their full support, acknowledging the critical role of monetary policy in stabilising the economy. At the 2025 Monetary Policy Forum, the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, commended the CBN for its ongoing efforts to restore credibility to the nation’s monetary framework. Edun specifically highlighted that recent reforms by the CBN had significantly boosted investor confidence and provided rating agencies with a clearer understanding of Nigeria’s economic landscape. He recognised that one of the key achievements under Governor Olayemi Cardoso’s leadership was the restoration of trust in monetary policy decisions, which had previously been undermined by inconsistencies and market uncertainty.
On the issue of inflation, the Minister reaffirmed his strong support for the CBN’s tightening measures, emphasising the importance of monetary stability in driving economic growth. He acknowledged that inflation remains one of the biggest challenges facing Nigeria’s economy, impacting both households and businesses. While monetary policies such as interest rate hikes and liquidity tightening are necessary, Edun also stressed that fiscal measures are vital in ensuring overall economic stability.
Similarly, the Minister of Budget and Economic Planning, Abubakar Bagudu, commended the growing collaboration between fiscal and monetary policy authorities, describing it as being in the nation’s best interest. Speaking at the forum, Bagudu highlighted that Nigeria had seen increased cooperation between the two arms of economic management over the past 18 months. He attributed this strengthened coordination to President Bola Tinubu’s deep understanding of the trade-offs between fiscal and monetary policy, which has been clearly reflected in the administration’s Renewed Hope Agenda.
Bagudu emphasised that this collaboration had been bolstered by the experience and expertise of key figures such as Edun and Cardoso, who had both worked closely with President Tinubu in the past. According to Bagudu, this familiarity had created a shared vision for economic growth, fostering constructive debates and ensuring that policy direction is aligned and effective in addressing the country’s challenges. “The central bank and the fiscal authorities are clear in their priorities and objectives, and no doubt disagree. But that’s how it should be. It should be healthy because when the expenditure-to-GDP ratio is lower than it should be, our first significant objective is to increase revenue-to-GDP and grow the revenue-to-GDP and expenditure-to-GDP ratio,” Bagudu explained.
He acknowledged that striking a balance between inflation control and economic growth was a delicate task. While monetary policy aimed to tighten liquidity and curb inflation, fiscal policy focused on boosting government expenditure in productive sectors to stimulate growth. Bagudu emphasised the importance of inclusivity in economic planning, noting that the Renewed Hope Agenda sought to ensure that economic growth translated into tangible benefits for all Nigerians.
According to him, Nigeria still possesses significant potential for productivity growth, particularly in key sectors such as agriculture and solid minerals. He observed that while the fiscal authorities believed that increased spending on domestic production would yield substantial benefits, the central bank had opted not to intervene directly in these sectors. However, he stressed that investment in agriculture remained critical, especially considering security improvements in the Northwest and Northeast, which had positively impacted farming activities in previously volatile regions.
Bagudu’s remarks underscored a critical aspect of economic planning—balancing the need to control inflation with the imperative to drive growth. While the CBN’s tight monetary policy was essential for stabilising prices, fiscal authorities recognised that strategic investments in key sectors could help mitigate the adverse effects of inflation on households and businesses. The growing alignment between fiscal and monetary authorities marks a significant departure from previous years, when policy disconnects often resulted in economic inefficiencies. The current synergy reflects a more coordinated approach to tackling inflation while ensuring that economic growth remains on course.
With both monetary and fiscal authorities working in tandem, Nigeria’s economic managers hope to guide the country toward a more stable and resilient future. However, the challenge will be in effectively implementing these policies while also addressing external shocks that could undermine progress. As inflation remains a pressing issue, the success of these measures will be closely monitored by stakeholders throughout the economy.
CBN’s likely trajectory in 2025 to tackle inflation
In response to the inflation crisis of 2024, the Central Bank of Nigeria (CBN) is expected to maintain a tight monetary policy stance in 2025 in order to curb inflationary pressures, anchor inflation expectations, and restore investor confidence in the economy. This approach will likely involve continued adjustments to key monetary policy tools, building on the measures that have already shown some success.
Deputy Governor for Economic Policy, Mohammed Sani Abdullahi, speaking at the Monetary Policy Forum last week, emphasised the decisive steps taken in 2024. According to him, the Bank raised the Monetary Policy Rate (MPR) by a cumulative 875 basis points, bringing it to 27.50% by December 2024. Additionally, the Cash Reserve Ratio (CRR) for Other Depository Corporations was increased to 50%, while for Merchant Banks, it was raised to 16%. The Liquidity Ratio was kept steady at 30%. Abdullahi noted that these policies played a crucial role in addressing inflationary pressures and stabilising market conditions. Given the relative effectiveness of these measures, it is highly likely that the CBN will continue this trajectory in 2025, adjusting its tools as necessary to maintain control over inflation and support economic stability.
Sani Abdullahi pointed out that the monetary tightening efforts had initially yielded positive results, with year-on-year headline inflation declining to 32.15% in August 2024, down from a peak of 34.19% in June 2024. However, fresh inflationary pressures resurfaced between September and December 2024 due to rising energy costs and increased consumer demand during the festive season. While inflation remained elevated at the end of the year, an in-depth analysis revealed a slowdown in food prices—a key component of overall inflation. This suggests that inflation may have reached its peak and could begin to trend downward with sustained policy interventions. This trend reinforces the importance of continued vigilance and targeted monetary actions to manage the evolving inflationary landscape, especially as global and domestic factors remain unpredictable.
Recognising the impact of exchange rate stability on inflation control, the CBN took aggressive steps to curb volatility in the foreign exchange (FX) market. One of its most significant reforms was the liberalisation of the FX market, aimed at unifying the previously fragmented system and reducing speculative-driven premiums. Before adopting a flexible exchange rate regime, the premium between the official and parallel market rates had soared to 62.33% between January and May 2023. However, with the introduction of this regime, the premium dropped dramatically to 0.10% by June 2023, signalling progress toward market convergence.
As a result of these reforms, diaspora remittances surged from N12.48 trillion in 2023 to N22.73 trillion by the end of Q3 2024. The fourth-quarter figures, which are expected to push this amount to N31.78 trillion, would further strengthen FX supply and contribute to stabilising the naira. However, the backlog of outstanding FX obligations temporarily widened the premium, prompting the CBN to clear $7 billion worth of pending liabilities. Additionally, the introduction of the B-Match system has improved operational efficiency and transparency in the FX market. Alongside this, the launch of the FX Code has reinforced fair trading practices and enhanced confidence in the financial system, creating a more stable foundation for future growth and economic resilience.
Beyond monetary interventions, the CBN has also strengthened its collaboration with fiscal authorities to address structural issues, particularly in food inflation. A key measure in this regard was the release of 2.15 million bags of fertiliser to the Ministry of Agriculture and Food Security. This initiative aimed to boost agricultural productivity, ease supply-side constraints, and stabilise food prices—an essential factor in the broader inflation equation.
Despite these efforts, economic uncertainty remains a significant challenge for policymakers. The Nigerian economy is undergoing substantial transformations, and navigating these shifts requires a deep understanding of their long-term implications. According to Sani Abdullahi, while notable progress has been made in stabilising inflation and restoring investor confidence, the CBN’s work is far from over. Persistent demand and supply-side shocks continue to hinder the achievement of a single-digit inflation target, highlighting the need for decisive policy actions to prevent inflation expectations from becoming entrenched. The path forward will require sustained coordination and flexibility in policy execution, along with an unwavering focus on addressing both the immediate and structural drivers of inflation.
The Deputy Governor emphasised the importance of maintaining robust communication and stakeholder engagement to effectively manage inflationary expectations. Moving forward, the CBN is expected to remain firm in its disinflation strategy while adapting to emerging economic realities. The Bank’s approach in 2025 will likely involve a mix of continued monetary tightening, targeted foreign exchange (FX) market interventions, and structural support for key sectors. All these measures aim to ensure long-term price stability and bolster economic resilience, while also navigating the complexities of both domestic and global economic challenges. The success of this approach will depend on the CBN’s ability to maintain flexibility in its policies and work closely with fiscal authorities to address both immediate and structural inflation drivers.
If effectively implemented, the CBN’s strategy for 2025 could lead to a gradual reduction in inflation, particularly in the second half of the year. A more stable exchange rate, improved food supply, and better liquidity management could ease inflationary pressures. The stabilisation of the foreign exchange market and an increase in forex supply could strengthen the naira, which in turn would help reduce import-driven inflation. These factors, combined with continued fiscal and monetary cooperation, could provide a more favourable environment for economic growth, improving the purchasing power of households and businesses while laying the groundwork for sustainable economic recovery. However, this will require ongoing adaptability to external shocks and a comprehensive focus on both demand and supply-side challenges.
As inflation begins to decline, the CBN may consider lowering interest rates to encourage business expansion and investment. This could spur stronger economic growth and job creation, as businesses take advantage of improved credit conditions to expand their operations, thereby supporting overall economic activity. The CBN’s strategy to tackle inflation in 2025 represents a well-balanced mix of monetary tightening, foreign exchange market reforms, and supply-side interventions.
While the challenge remains formidable, a coordinated approach between the CBN, fiscal authorities and the private sector could create the foundation for long-term price stability. The coming months will be pivotal in determining whether these policies can effectively tame inflation and restore economic confidence. The outcome of these measures will not only shape Nigeria’s economic performance in 2025 but also influence the country’s long-term financial stability. As the battle against inflation intensifies, all eyes will be on the CBN’s ability to navigate the complex economic landscape and deliver tangible, sustainable results that benefit both businesses and households alike.
The Association of Bureaux De Change Operators of Nigeria (ABCON), at the weekend, called on the Central Bank of Nigeria (CBN) to review downwards, the huge capital requirement for Bureaux de Change (BDCs) recapitalization, saying meeting the capital base remains big challenge for majority of operators.
The new CBN guidelines for the sector also requires all Tier-1 BDCs to raise N2 billion minimum capital to remain in business, while Tier-2 BDCs are to raise N500 million minimum capital. The Tier-1 BDCs will operate nationally, while the Tier-2 BDCs can only operate in one state within the Federation. The operators have June 3rd deadline to comply.
In his comments on recapitalisation of BDCs, ABCON President, Alhaji Aminu Gwadabe, called on the apex bank to grant ABCON self regulatory status to aid forward guidance of its members.
According to him, the current naira rally at both official and parallel markets, showed that over the weekend, it exchanged officially at N1,485.95/$, one of its strongest position in seven months. The naira equally rallied to N1,610 to dollar at the parallel market.
He also sought CBN’s backing for BDCs for operators IT platforms that would entrench a tech-driven industry and boost transparency in market operations.
Gwadabe said granting self-regulatory status to ABCON will enable the group to sanction erring operators on non-compliance and boost compliance to regulatory guidelines.
Gwadabe hinged the naira rally to the newly implemented Foreign Exchange (FX) Code investors confidence, investment in oil and gas output streamlining diaspora remittances aimed at enhancing market liquidity, transparency and guiding market participants in Nigeria’s foreign exchange sector, adding that meeting the needs of BDCs will further strengthen the local currency against the dollar.
He backed the apex bank’s position that the FX Code is comprehensively addressing various aspects of market conduct and practice, it is not intended to be exhaustive.
He said the policy authorises the CBN to establish and enforce directives regarding the standards for financial institutions under which FX deals are to be conducted.
Gwadabe said the code will further entrench transparency and accountability in the FX market, and continually sustain naira rally.
He urged all BDCs and authorized dealers to comply with the FX code guidelines in their operation while also adopting regulatory, management , Board , and activity report for their Risk exposures on their AML/CFT manual
He also backed CBN’s position that all institutions engaged in the foreign exchange market must also provide the CBN with a detailed implementation plan outlining how they intend to achieve full compliance with the FX Code.
This plans are expected to be formally approved and signed by the institution’s board of directors, and it must be accompanied by relevant extracts from the board meeting where the plan was reviewed and endorsed.
Gwadabe reiterated CBN-licenced BDCs readiness for regulatory reforms that would reposition the operators for enhanced efficiency, transparency and compliance with set regulations in the interest of the financial system and economy.
Speaking in Abuja, Saleh said one of his major priorities since assuming office was to reduce the cost of hajj and make it more affordable for Muslims across the country.
“I am confident that lowering hajj fares will bring relief to our pilgrims, leaders, and the entire Muslim Ummah,” he said.
Saleh announced that he had engaged key service providers, including airliners, Masha’ir service providers, accommodation providers, and transportation companies, in collaboration with the Forum of State Pilgrims Welfare Agencies to make hajj operations more convenient.
The NAHCON chairman said the negotiations had yielded significant reductions in service costs.
Commenting on Masha’ir services, he said pilgrims were charged 4,770 Saudi Riyals last year, but following discussions, NAHCON secured a reduction of over 700 Saudi Riyals per pilgrim.
He added: “On accommodation in Madinah, the cost per bed space was 5,000 Riyals last year, but a reduction of 200 Riyals per pilgrim has been achieved. Last year’s transportation cost stood at 1,300 Riyals per pilgrim, but this year, we successfully negotiated a 130 Riyal reduction per pilgrim.
“We have worked on the airfare. Given Nigeria’s geographical diversity, airfare costs vary across regions. However, we have secured a $399 reduction per pilgrim.
“These reductions have significantly impacted the overall hajj fare, and we are still expecting further adjustments.”
Stressing that NAHCON was not asking for government’s subsidies, Saleh urged authorities to consider selling dollars to the commission at the official government exchange rate.
The agency chairman noted that the request, if approved, would further lower hajj fares and take a lot of burden off the shoulders of pilgrims.
“We have estimated the dollar exchange rate at N1,550, N1,600, and N1,650. But given the fluctuations, we settled on a moderate rate. If we secure a reduction in forex rates, we will refund any savings to the pilgrims,” he said.
Saleh urged governors to support pilgrims’ boards in their states by providing loans for them to settle payments with NAHCON before the final payment deadline set by Saudi Arabian authority.
The NAHCON chairman explained that the commission has no control over payment deadline but could only appeal to the Saudi Arabia’s Ministry of Hajj for an extension, if necessary. He urged intending pilgrims to complete their payments promptly to avoid any last-minute issues.
Saleh also urged states’ pilgrims’ welfare agencies and other stakeholders to intensify public enlightenment campaigns to ensure that intending pilgrims understand the importance of timely payment and proper preparation to have a successful hajj pilgrimage.
The Executive Director and CEO of the Nigerian Export Promotion Council (NEPC), Nonye Ayeni, has revealed that the council is collaborating with the Central Bank of Nigeria (CBN) to include the CFA franc as an accepted currency for export proceeds in the country’s banking system.
Speaking over the weekend, Ayeni disclosed that the CBN has approved the inclusion of the CFA franc on the Nigeria Export Proceed (NXP) Form, which exporters are required to complete when shipping goods out of Nigeria.
She noted that NEPC will work closely with the CBN and banks to ensure the full implementation of this policy.
Ayeni made this known during the presentation of the 2024 non-oil export performance report in Abuja, describing the move as a major breakthrough.
She also highlighted the positive impact of NEPC’s flagship initiative, #DoubleYourExport, in driving growth in the volume and value of Made-in-Nigeria products.
She said: “The Council through collaboration with other relevant agencies has contributed towards economic diversification with an impressive non-oil performance of $5.456 billion in 2024. It is worth noting that this reflects a significant increase of 20.77% (938.442 million) compared to the recorded figure of US$4.517 Billion for the preceding year of 2023.
“This achievement can be attributed to the following, the active diversification of the economy through the non-oil sector with emphasis on promoting agriculture, solid minerals, and manufacturing.
Increased Production in Energy, Agricultural, and Solid Mineral Sectors.
The positive impact of the current effort by the federal government to enhance trade through effective policy implementation both fiscal and monetary.
“The global economy’s recovery from previous downturns has increased demand for Nigerian exports, further boosting export performance. It is also interesting to note that there was an increase in the volume of agricultural commodities as non-oil export returns showed that 7.291 million metric tonnes of exportable products were exported in the period under review”.
She added that a total of Two Hundred and Forty – Six (246) distinct products were exported in the year under review. These exports spanned manufactured, semi-processed goods, industrial extracts, and agricultural commodities. Based on information received from Pre-shipment Inspection Agents (PIAs), of the top 20 products and commodities exported in the year 2024, Cocoa Beans, Urea/Fertilizer, Sesame Seed, Cashew Nuts/Kernels, Aluminum Ingots, Cocoa Butter, Copper Ingots, Soya Beans/Meal, Gold Dore and Hibiscus Flower were top of the list respectively.
“Interesting, Cocoa Butter, among other products, has experienced a notable surge in exportation, propelling it into the top 10 ranking of exported products. This upturn may be attributed to increased global demand, improved production processes, enhanced market access to key importing countries, and targeted trade policies promoting value-added products.
“The top commodity in terms of total non-oil export, accounting for 30.55% in percentage value was Cocoa Beans, followed by Urea/Fertilizer at 15.74% while Sesame Seeds contributed 8.50% of the total exported products respectively. There are quite some other exportable products that have contributed significantly to this huge volume of exports”.
Of the top 20 exporting companies in Nigeria, Indorama Eleme Fertilizer and Chemical Limited and Starlink Global & Ideal Limited secured the foremost position with $475,309,887.26, representing 8.71% and $456,740,920.00, representing 8.37% respectively.
This is attributed to their notable export volumes of Fertilizer and Cocoa products.
A total of Thirty-Two (32) banks participated in the processing of NXP Forms for export in the year in review. With a total number of 21,655 NXP forms processed. Zenith Bank Plc maintained its leading position, contributing 39.03% to the total number of NXPs for non-oil export.
Following closely is First Bank of Nigeria Plc at second position with 8.44%, while Fidelity Bank Plc held the third position, contributing 6.41% to the overall NXP transactions respectively. Other banks also contributed significantly to export volumes in Nigeria.
The ED is calling on is banks to support performing exporters as this will provide affordable finance that will help increase the basket of exportable products, stimulate value-addition, and thereby increase our foreign exchange earnings.
Value addition to our exportable products is very important as they attract premium pricing in the global market. No doubt exporting companies can scale up their production if they have access to affordable finance.
In a major step toward reforming the country’s foreign exchange (FX) market, the Central Bank of Nigeria (CBN) last week launched the Nigeria Foreign Exchange Code (FX Code). This new framework is designed to improve transparency, fairness, and efficiency in FX transactions, all of which are crucial for economic growth and currency stability. Assistant Editor Nduka Chiejina reports
The introduction of the FX Code comes at a time when Nigeria’s foreign exchange market has faced serious challenges. These include speculative trading, price manipulation, and concerns over market integrity.
By setting clear ethical and operational guidelines, the CBN aims to create a more structured, accountable, and globally competitive FX market just as it hopes to support its implementation, the central bank has also released a guideline outlining the responsibilities of market participants and the expected standards of conduct.
The FX Code was developed in response to irregularities in the foreign exchange market that have negatively impacted the economy. One major issue has been speculative trading, where certain players manipulate the market to influence exchange rates, causing unnecessary fluctuations.
Price manipulation has also been a problem due to a lack of transparency, giving some market participants unfair advantages. The absence of clear regulations has led to inconsistent FX supply, creating liquidity shortages that affect businesses and individuals. Additionally, the unpredictability of the market has made foreign investors hesitant, leading to an erosion of investor confidence. By addressing these issues, the FX Code seeks to establish a well-functioning, liquid, and transparent market that aligns with Nigeria’s flexible exchange rate system.
The FX Code is based on six key principles that define how market participants should operate. The first is ethics, which requires all participants to act professionally and fairly to maintain the integrity of the market. The second is governance, ensuring that institutions involved in FX trading have strong internal oversight and compliance measures. The third principle, execution, mandates that transactions must be negotiated and carried out transparently to promote fair pricing and liquidity.
The fourth, information sharing, emphasises the importance of clear and accurate communication while also protecting confidential information to prevent market abuse. The fifth principle, risk management and compliance, requires institutions to have effective systems in place to identify, monitor, and report risks associated with FX trading.
Finally, confirmation and settlement ensures that transactions are completed efficiently and predictably to avoid disruptions in the market. These principles are in line with international best practices, making Nigeria’s FX market more reliable and globally competitive.
The FX Code applies to all participants in the foreign exchange market. This includes Authorised Dealers, which are financial institutions licensed by the CBN under the CBN Act of 2007 and the Bank and Other Financial Institutions Act (BOFIA) of 2020. These institutions play a key role in the wholesale FX market. The Code also applies to other financial entities involved in foreign exchange transactions as part of their licensed operations. By setting universal standards, the CBN aims to ensure that all participants operate under the same rules, promoting fairness and stability in the FX market.
The introduction of the FX Code is expected to bring significant benefits to the economy. One of the most important outcomes is increased transparency, as the new rules will help reduce market manipulation and unfair practices.
The Code is also expected to boost investor confidence, as both foreign and local investors will feel more secure knowing that Nigeria’s FX market is governed by clear and enforceable rules. With better governance and oversight, the availability of foreign exchange will become more stable and predictable, reducing market uncertainty. Additionally, by promoting ethical trading and discouraging speculation, the FX Code could help minimise excessive volatility in exchange rates.
This, in turn, will benefit businesses and industries that rely on foreign exchange for trade and investment, strengthening the overall economy.
The FX Code marks an important step toward a more transparent and efficient foreign exchange market in Nigeria. While its success will depend on strict enforcement and compliance by market participants, it provides a much-needed framework to improve market integrity and investor confidence. If properly implemented, the FX Code could play a key role in stabilising the naira and supporting long-term economic growth.
The FX Code requires all market participants to ensure that illegal financial transfers are prevented and that strong policies against money laundering are put in place. These measures are necessary to protect the integrity of Nigeria’s financial markets and the global financial system.
In the FX Code, the term “Market Participant” generally refers to banks, financial institutions, and individuals who are authorised to engage in foreign exchange transactions. In some cases, certain principles will apply more specifically to banks, while others may focus on the responsibilities of individuals working in the market. For example, some rules are designed to guide the overall policies of banks, while others emphasise ethical behavior among personnel. The FX Code sometimes uses the terms “banks” and “personnel” separately to indicate when a principle applies specifically to one group or the other.
Nigeria follows a flexible exchange rate system, meaning the value of the naira is determined by supply and demand in the foreign exchange market. The FX Code has been introduced to address new challenges in the financial markets and respond to changing conditions in the foreign exchange sector. It establishes a set of principles that promote ethical practices and ensure the smooth operation of the foreign exchange market.
The goal is to create a market that is fair, open, and transparent, allowing different market participants to engage in transactions confidently and efficiently. The Code also ensures that exchange rates are determined in a way that reflects market realities and upholds acceptable business standards.
Market participants are expected to follow the broad principles outlined in the FX Code and resolve any issues that arise in a fair and reasonable manner. The implementation of this Code, alongside well-coordinated monetary, exchange rate, and fiscal policies, will help keep Nigeria’s foreign exchange market competitive. It will also strengthen the interbank market, safeguard the country’s foreign exchange reserves, and maintain financial stability.
To ensure compliance, the FX Code is issued as a guideline under the authority of the CBN Act of 2007 and the BOFIA Act of 2020. These laws give the CBN the power to set standards for institutions involved in foreign exchange transactions.
As part of the implementation process, market participants must conduct a self-assessment and submit a report to the CBN by January 31, 2025, detailing their level of compliance with the FX Code. Additionally, all participants must submit a compliance implementation plan, approved and signed by their Board of Directors, along with a record of the Board meeting where the plan was approved.
To ensure continued compliance, market participants will be required to submit a quarterly report to the Financial Markets Department (FMD) of the CBN. These reports must be submitted within 14 days after the end of each calendar quarter, with the first report due by March 31, 2025.
The CBN has put in place enforcement measures to ensure that market participants adhere to the FX Code. Institutions that fail to comply may face penalties, including monetary fines, as allowed under the CBN Act of 2007 and the BOFIA Act of 2020. The FX Code will officially take effect on December 2, 2024.
Dr. Omolara Duke, Director of the Financial Market Department at the CBN, described the launch of the Nigerian Foreign Exchange (FX) Code as a major achievement, reflecting the effort put into shaping a better future for Nigeria’s foreign exchange market.
She explained that the Central Bank of Nigeria (CBN) created the FX Code because it believes Nigeria deserves a market that is ethical, transparent, and resilient. The goal was to develop a system that serves everyone fairly and builds confidence both within and outside the country.
In the past, a lack of trust affected the smooth operation of the foreign exchange market. To address this issue, the Global FX Code was created through a partnership between public and private sector players across different financial markets worldwide. Now, the Nigerian FX Code is being introduced as a set of guidelines to promote integrity and ensure the effective operation of the foreign exchange market.
The FX Code is built on six key principles: ethics, governance, execution, information sharing, risk management, and settlement processes. These principles reflect a shared commitment to creating a strong and trustworthy foreign exchange market in Nigeria. As part of this commitment, the CBN will officially sign the Statement of Commitment, which will be published in the Central Bank Register on the website of the Bank for International Settlements.
By doing so, Nigeria will join 54 other central banks, including those of Brazil, Canada, Russia, Angola, and South Africa, in recognising and implementing these standards. The FX Code aims to establish a market where trust is earned, rules are followed, and all participants—whether big or small—can engage with confidence.
The real strength of the FX Code is in the long-term impact it can create. The goal is not just to attract investors and traders but to build a market known globally for integrity and reliability. This trust is expected to drive real economic growth. However, simply having rules is not enough.
The FX Code requires market participants to embrace these principles as part of their daily operations. It calls for accountability, ethical decision-making, and a firm commitment to the values outlined in the Code. The CBN has pledged to lead by example, ensuring fairness, integrity, and transparency while working closely with stakeholders to turn this vision into reality.
Mohammed Sani Abdullahi, Deputy Governor of Economic Policy, emphasised that the FX Code was developed through collaboration between central banks, the Bank for International Settlements (BIS), private sector players, and foreign exchange infrastructure providers from different countries.
The Code plays a crucial role in the financial system, serving as a moral guide for all market participants, including banks and non-bank financial institutions. By adopting the FX Code, these institutions commit to ethical practices that prevent misconduct and ensure fair and transparent trading. This is especially important in maintaining the confidence of investors and the public.
The FX Code is expected to significantly improve market integrity and transparency. A transparent market means all participants will have access to the same information, reducing unfair advantages and speculation. He noted that the recently introduced BMATCH system has already increased transparency in Nigeria’s foreign exchange market, helping to stabilise the naira by narrowing the gap between the official and parallel market rates.
Abdullahi also acknowledged that the CBN itself has faced ethical issues in the past. To demonstrate its commitment to the new standards, the central bank is signing its own version of the FX Code, holding itself to the same—if not higher—standards.
This aligns with the CBN’s new strategy under the leadership of the governor, which is based on the principles of IMPACT: Integrity, Meritocracy, Professionalism, Accountability, Courage, and Tenacity.
He described the launch of the FX Code as the beginning of a new era—one focused on accountability, ethics, and compliance. The principles in the FX Code have been carefully structured into 52 detailed guidelines, which will soon be published online. By following this roadmap, Nigeria is not only aligning with international best practices but also committing to building a foreign exchange market that is strong, fair, and trustworthy.
The CBN Governor Olayemi Cardoso delivered a straightforward message to bank CEOs, emphasising the importance of protecting Nigeria’s foreign exchange (FX) market.
“This is a market,” he stressed, urging them to take responsibility for its success or failure.
He made it clear that if the market doesn’t function well, the blame falls on everyone involved — there’s no one else to hold accountable.
He also highlighted the crucial role of compliance officers at banks, insisting they perform their duties without fear or favor, as they are essential to the journey toward a better market.
Addressing attendees at the launch of the Nigeria Foreign Exchange Code (FX Code), Cardoso welcomed the insightful discussions of the day and expressed his appreciation for everyone’s commitment to a vision of a fair, transparent, and efficient FX market. Citing Nelson Mandela, he reminded everyone of the importance of listening before speaking. After taking in all perspectives, he shared his own vision — a collective commitment to a stronger and more transparent FX market.
He underscored that the FX Code represents a turning point by setting clear standards for ethical behavior, transparency, and good governance in Nigeria’s FX market. This new approach marks the end of business as usual. Reflecting on the past, he pointed out that multiple exchange rates in the country had benefited a few at the expense of the majority, damaging market integrity.
He mentioned the $7 billion FX backlog that took over a year to verify, revealing many unethical and illegal activities that have hurt Nigeria’s reputation. Now that the forensic review is nearly complete, final settlements will soon be processed.
Cardoso also criticised the excessive borrowing from the central bank (ways and means financing), which harmed the economy by increasing inflation, depleting the naira’s value, and eroding public trust. These negative practices, he insisted, must never return.
The FX Code firmly rejects such harmful behaviors and commits to a future defined by fairness, trust, and market-driven principles.
He was clear that unethical actions, whether by those with privileged access or by others complicit in bad practices, have weakened public trust and hurt the economy. Any violations of the FX Code will be met with strict penalties.
The governor noted that reforms carried out in 2024 are already showing positive results. These changes aimed to let the naira’s value be determined freely by the market and reduce fluctuations by eliminating various market distortions. Key reforms included ending quasi-fiscal interventions, unifying exchange rate windows, clearing overdue FX commitments, and adjusting monetary policy tools. These steps were necessary to restore order to the FX market, regain credibility, and refocus the CBN on its main responsibilities.
One of the most significant developments was the introduction of the Electronic Foreign Exchange Matching System (EF-EMS) in December 2024. This new system has greatly improved transparency and efficiency in the market.
Since its launch, the naira has strengthened considerably, rising from 1,663.90 in December 2024 to 1,534.54 as at the weekend. Exchange rate stability is crucial for Nigeria’s economic health, as it affects the country’s balance of payments, external reserves, international trade, inflation, economic growth, and foreign investment. Maintaining a stable exchange rate is key to improving the overall economic well-being of Nigerians.
Cardoso also highlighted the growth in Nigeria’s external reserves, which increased by 12.74%, reaching $40.68 billion by the end of 2024 — the highest level in the past three years. This growth is a direct result of the reforms aimed at clearing old FX debts and building reserves naturally. These achievements reflect the hard work and dedication of all stakeholders, many of whom were present at the event.
He emphasised that the FX Code is more than just a set of guidelines; it’s an enforceable framework under the CBN Act 2007 and BOFIA Act 2020. Violations will result in penalties and administrative sanctions.
Cardoso urged market participants to see compliance as essential for restoring public trust in Nigeria’s financial system, not just a regulatory requirement.
He called on the leaders in the room — board chairs, managing directors, and chief compliance officers — to lead by example and integrate the principles of the FX Code throughout their organisations.
Cardoso warned that the era of opaque practices is over. Any institution or individual who tries to undermine the integrity of Nigeria’s financial markets will face serious consequences.
The FX Code is a binding commitment to transparency and accountability, and everyone must contribute to this effort.
He also thanked the Financial Markets Dealers Association for training members on the FX Code and the EF-EMS system. Their dedication to building capacity is crucial for the success of these initiatives.
He expressed gratitude to the Global Foreign Exchange Committee and all other stakeholders for their invaluable support in making this milestone possible. As the event concluded with the signing of the FX Code, Cardoso called it a collective pledge to uphold transparency, ethical conduct, and fairness in Nigeria’s foreign exchange market.
Challenges ahead
While the introduction of the FX Code marks a significant step toward greater transparency, integrity, and stability in Nigeria’s foreign exchange market, several challenges remain in ensuring its full and effective implementation. The success of this initiative depends not just on the strength of the Code itself but also on the willingness and ability of market participants to adapt to the new framework.
One of the primary concerns is compliance among financial institutions and other stakeholders within the FX market.
While the Code establishes clear ethical and operational guidelines, ensuring that all participants strictly adhere to these principles may require continuous monitoring and robust enforcement mechanisms. Some institutions might be tempted to revert to old habits, exploiting loopholes or engaging in practices that undermine market integrity. Without a strong oversight framework, there is a risk that the positive changes introduced by the FX Code could be diluted over time.
Additionally, market adaptation poses a challenge. Some participants who previously benefited from opaque and preferential trading practices may resist the transition to a more structured and transparent system. Those accustomed to exploiting arbitrage opportunities, manipulating exchange rate differentials, or engaging in non-compliant transactions may view the new regulations as a threat to their profitability.
This resistance could manifest in subtle forms, such as slow adoption of the Code’s principles, non-disclosure of critical transaction details, or attempts to bypass new reporting requirements.
The CBN must remain vigilant in identifying and addressing such behaviors to ensure that the FX market operates in line with the established ethical and regulatory standards.
Beyond domestic compliance issues, external economic factors continue to play a significant role in shaping Nigeria’s FX market dynamics. The country’s exchange rate is highly sensitive to global economic conditions, particularly fluctuations in oil prices.
Given that crude oil remains Nigeria’s primary source of foreign exchange earnings, any sharp decline in global oil prices could put pressure on external reserves, disrupt FX supply, and potentially destabilise the naira. Similarly, global foreign exchange trends, including interest rate adjustments by major central banks, shifts in investor sentiment, and geopolitical uncertainties, can influence capital flows into and out of Nigeria. While the FX Code aims to bring stability and transparency, it cannot completely insulate the market from these external shocks.
To overcome these challenges, the Central Bank of Nigeria must take proactive steps to ensure that the FX Code is not just a set of guidelines on paper but a framework that is actively enforced and upheld across the market.
Continuous monitoring will be essential in assessing compliance levels, identifying potential breaches, and addressing any emerging risks. Institutions found violating the Code must face strict penalties to deter non-compliance and reinforce the seriousness of the new regulatory environment.
At the same time, the CBN must remain flexible in its policy approach, refining the FX framework as needed to reflect evolving market conditions and global economic realities.
Ultimately, the success of the FX Code depends on a collective commitment from regulators, financial institutions, and market participants. By maintaining strong enforcement mechanisms, fostering a culture of transparency, and adapting to external economic shifts, Nigeria can create a foreign exchange market that is not only stable and efficient but also serves as a foundation for broader economic growth and investor confidence.
A positive step for Nigeria’s FX Market
The launch of the Nigeria Foreign Exchange Code marks a significant milestone in the country’s journey toward a transparent, efficient, and investor-friendly FX market.
By setting ethical and operational standards, the Code is expected to restore confidence, enhance liquidity, and stabilise the naira, ultimately supporting Nigeria’s economic growth.
However, the success of this initiative will depend on strict enforcement, cooperation from market participants, and continuous policy improvements. As the FX Code takes effect, all eyes will be on the CBN to ensure that this reform delivers its intended results.
