The decision of the Central Bank of Nigeria (CBN) to embark on aggressive interest rate hikes boosted investors’ demand for fixed income instruments in 2024, President, Association of Issuing Houses of Nigeria, ‘Kemi Awodein, has said.
Speaking during the AIHN’s Annual General Meeting and presentation of 2024 financial statements in Lagos, she said the apex bank had relied on the interest rate hike to tackle inflation.
The AIHN financial statements for 2024 showed that total funds and liability grew from N452.6 million in 2023 to N518.2 million in 2024.
Its total income grew from N86.56 million in 2023 to N123.6 million in 2024, while expenditure for 2023 stood at N50.08 million, the figure for 2024 was N60.75 million resulting to surplus of N36.4 million and N62.9 million for 2023 and 2024 respectively.
Speaking further on the markets development, Awodein said: “Key drivers for fixed income instruments in 2024 included: – Central Bank of Nigeria’s (CBN) aggressive interest rate hikes to combat inflation. There were significant interest rate hikes in February and March 2024 (a total of 600 basis points), aimed at curbing inflation. In 2024, CBN hiked the benchmark interest rate eight times and by 875 basis points to 27.5 per cent in November from 18.75 per cent at the beginning of the year”.
Awodein explained that the high-interest environment saw the crowding out of the private sector, affecting issuance activities.
She disclosed that government borrowing increased significantly, as efforts to manage liquidity were also heightened.
“Data indicate that about N12.83 trillion in OMO bills and T-bills were sold compared to N716.7 billion for the whole of 2023. Despite these challenges, as the year progressed, there was renewed investor confidence, leading to increased capital inflows,” she said.
She added: “This was driven by government policies and the anticipation of interest rate cuts in other markets. Significant in the year was the successful issuance of the first domestic dollar bond by the Debt Management Office (DMO)”.
Awodein disclosed that in 2024, the Nigerian investment banking sector saw significant activity in equities capital raises, spurred by the announcement on recapitalisation by CBN in March 2024.
“By years-end, a number of banking institutions had concluded transactions, with Access Bank Plc announcing the attainment of the new regulatory capital. The activity in the sector will continue in earnest in 2025 as the deadline of March 2026 approaches,” she said.
Continuing on highlights of market development, she said the transition of Aradel Holdings Plc from NASD to Nigeria Exchange (NGX) was impactful for investors and shareholders, providing investment opportunities as well as enhancing liquidity.
“Long-term debt capital raises were muted in 2024 in light of the interest rate regime and the significant and frequent issuances by the FGN. The private sector was essentially crowded out. Activities in debt capital raising was concentrated in Commercial Paper issuances”.
“Capital Raising – Prominent transactions included Seplat Energy’s $650 million bond issuance, aimed at expanding its energy operations, and Airtel Africa’s $500 million capital raise, which was used to enhance telecommunications infrastructure,” she stated.
“By the end of 2024, some banks, including Fidelity Bank, GT Bank, Access Bank, FCMB and Zenith Bank, had undertaken issuances targeted at meeting new capital requirements. Recapitalisation was completed at year’s end by Access Bank, with all Banks being required to complete their respective transactions before the end of Q1 2026,” she said.
The real motive behind the plan by the Central Bank of Nigeria (CBN) to take over the issuance and management of fixed income securities is still shrouded in secrecy. But the investing public deserves a more cogent and transparent explanation from the governor of the apex bank.
What is clear, however, is that the proposal has ignited a storm of debate across the financial market. The apex bank may well be driven by the desire to improve efficiency, enhance coordination, and perhaps rein in the abuse of Treasury Bills by banks that have turned them into easy profit avenues, often to the detriment of securities dealing firms.
Yet, beyond these possible intentions, the move raises weighty questions about institutional boundaries, regulatory clarity, and the long-term health of Nigeria’s capital market.
Fixed income securities, typified by government bonds, corporate bonds, and treasury instruments are the backbone of every mature financial system. They provide a benchmark for interest rates, enable governments and corporations to raise capital, and serve as a safe investment option for individuals and institutions. The success of this market depends on transparency, predictable regulation, and the confidence of investors.
Traditionally, the roles in this ecosystem are clearly defined. The Central Bank focuses on monetary policy, controlling inflation, managing liquidity, and ensuring financial stability. The Debt Management Office (DMO) handles the issuance of government debt instruments, while the Securities and Exchange Commission (SEC) regulates the capital market and protects investors. When these lines blur, confusion sets in, and the integrity of the market is threatened.
The CBN’s proposed foray into fixed income securities risks duplicating the functions of both the SEC and DMO. Such overlap can create regulatory arbitrage and uncertainty among market participants. Investors, particularly foreign portfolio investors, place a premium on institutional clarity. A fragmented regulatory environment could therefore undermine confidence and reduce participation.
Globally, leading economies have maintained a separation of responsibilities. In the United States, the Federal Reserve conducts monetary policy and manages short-term liquidity through open market operations, but the U.S. Treasury issues bonds, and the Securities and Exchange Commission oversees the secondary market. In the United Kingdom, the Bank of England works with the Debt Management Office but does not control the bond market. The same applies in South Africa, where the Reserve Bank maintains macroeconomic oversight while the National Treasury handles debt issuance.
I must be quick to add that these models work because they ensure checks and balances. No single institution controls all aspects of debt management, market regulation, and liquidity administration. Advocates of the CBN’s plan argue that bringing fixed income activities under one umbrella could enhance efficiency and liquidity management. However, efficiency in financial markets rarely comes from centralisation; it grows out of collaboration and transparency.
Nigeria already has strong infrastructure in this space: the Nigerian Exchange Limited (NGX) and FMDQ Group, supported institutionally by CBN, provide well-established platforms for listing and trading debt securities. What is required is not a takeover, but closer coordination among the CBN, DMO, SEC, and market operators to strengthen market depth and investor confidence.
A major risk of the proposed approach is the potential conflict of interest. If the CBN becomes both a regulator and an active participant in the fixed income market, it could compromise transparency and pricing integrity. Markets operate best when guided by clear rules and independent oversight, not when one institution assumes overlapping powers. Nigeria’s financial system would benefit more from a coordinated framework that leverages the comparative strengths of each institution. The CBN should continue to focus on its core mandate of monetary stability, while working closely with the DMO on debt management strategy and with the SEC on market regulation.
Furthermore, reforms should prioritise expanding participation in the fixed income market, encouraging corporate bond issuance, improving disclosure standards, and leveraging technology to increase transparency and efficiency. These steps would deepen liquidity and attract sustainable investment without altering institutional roles.
The CBN’s ambition to strengthen Nigeria’s debt market is commendable. However, true market development is built on shared vision, not concentrated power. Nigeria’s financial system has matured through years of institutional collaboration, a delicate balance that thrives on trust and predictability. Disrupting that equilibrium could destabilize an ecosystem painstakingly built over decades. If the CBN now intends to take over the fixed income market in broad daylight, one must ask: what becomes of SEC and the self-regulatory organisations (SROs) that safeguard market integrity? The days when SEC was merely a department under the CBN are long gone.
The CBN’s ambition could easily morph into a full-blown takeover of the fixed income market. And once that line is crossed, the Nigerian Exchange Limited (NGX) may well become the next target. Nigeria’s fixed income market doesn’t need another overlord; it needs integration, transparency, and inclusivity. The apex bank must resist the urge to blur regulatory boundaries or intimidate market operators into speaking in guarded tones for fear of victimisation. True reform flourishes in open dialogue, not in a climate of quiet compliance.
When the market went red recently in the presence of the Finance Minister, Wale Edun at NGX over the capital gains tax controversy, he wrapped his comments in a dose of damage control, assuring nervous stockbrokers that the government would look into the issue. At the heart of this new drama over fixed income securities lies a simple truth: confidence is the currency of every capital market. Once that confidence is shaken, even the best-intentioned reforms lose credibility. The CBN must remember that leadership of the financial system does not translate to ownership of it. Collaboration, not control, will define the strength and sustainability of Nigeria’s debt market. If the apex bank truly seeks progress, it must build bridges, not boundaries, with other regulators.
•Oni, an integrated communications strategist, is also a chartered stockbroker and commodities broker.
Commercial banks may see a depletion in their cheap deposits with the introduction of a new policy on non-Treasury Single Account (TSA) by the Central Bank of Nigeria (CBN).
Analysts at Afrinvest West Africa, said these funds have historically provided a sizable pool of cheap deposits for commercial banks.
The CBN last introduced 75 per cent Cash Reserve Ratio (CRR) on non-TSA government deposits – funds from Ministries, Departments and Agencies (MDAs) not swept into the TSA, particularly FAAC allocations to state and local governments is to deter banks relying on such funds to drive profitability.
A key outcome of the last Monetary Policy Committee (MPC) meeting was the introduction of a punitive 75 per cent CRR on non-TSA government deposits – funds from MDAs not swept into the Treasury Single Account (TSA), particularly FAAC allocations to state and local governments.
“Based on anecdotal evidence over the past three years, episodes of Naira depreciation often coincided with periods immediately following FAAC disbursements into the banking system. Since state and local government shares are immediately available on banks’ balance sheets, a possible link exists between FAAC flows and exchange rate volatility. That said, by sterilising 75 per cent of such balances, banks would need to double down on their effort to mobilise cheap capital from private sector,” Afrinvest stated.
They explained that for investors, the policy signals a modest easing bias, but one tempered by liquidity sterilisation, implying short-end yields may trend lower while FX stability is preserved. Overall, the MPC’s decisions underscore a delicate balancing act of loosening just enough to support growth momentum, while tightening around vulnerable liquidity channels to safeguard price & FX stability.
“From a market perspective, the policy shift sets the stage for nuanced adjustments across asset classes. In fixed income, short-term yields are likely to moderate slightly as the corridor adjustment transmits more directly into interbank rates, though liquidity sterilisation will keep longer-dated instruments sticky,” they added.
“The equities market is expected to benefit from the growth-supportive tilt of policy, particularly cyclical stocks (whose performance rises with economic growth) such as the industrial goods and consumer goods. However, banks with heavy government deposit exposure may face near-term margin pressures. In the FX market, the oil-driven improvement in supply conditions coupled with liquidity sterilization reduces the risk of immediate naira depreciation, but the outlook remains conditional on sustaining production and external inflows,” they said.
Speaking during the MPC, CBN Governor, Olayemi Cardoso acknowledged the continued stability of the foreign exchange market and its critical importance in achieving rapid disinflation, and therefore called on the bank to continue the implementation of policies that would further boost capital inflows and deepen foreign exchange liquidity.
On the financial sector, the MPC noted the continued resilience of the banking system, with most of the financial soundness indicators remaining within their respective prudential benchmarks.
Members also acknowledged the significant progress in the ongoing bank recapitalization exercise, as 14 banks have fully met the new capital requirement.
They therefore urged the bank to continue the implementation of policies and initiatives that would ensure the successful completion of the ongoing recapitalisation exercise.
The Committee further noted the successful termination of forbearance measures and waivers on single obligors, which has helped to promote transparency, risk management and long-term financial stability in the banking system.
The MPC reassured the public that the impact of the removal of forbearance is transitory and does not pose any threat to the soundness and stability of the banking system.
The Monetary Policy Committee (MPC) decisions during the just concluded 302nd meetings in Abuja opened a new chapter in credit access for businesses. The decisions, including interest rate cut to 27 per cent will attract new investments, and support job creation. By lowering interest rates, the committee begins a new season of monetary easing to sustain disinflation, output growth, stable naira and robust external reserves. The expected surge in credit access supports Central Bank of Nigeria (CBN’s) continued push for expansive private sector that contributes immensely to government’s $1 trillion economy plan, reports Ibrahim Apekhade Yusuf
For the first time in five years, the Central Bank of Nigeria (CBN)-led Monetary Policy Committee (MPC) decided to cut interest rates after a decisive meeting held last week in Abuja.
The cutting of its benchmark interest rate by 50 basis points to 27 per cent on September 23, comes after a long tightening cycle aimed at curbing runaway inflation.
The Committee acknowledged the continued stability of the foreign exchange market and its critical importance in achieving rapid disinflation, and therefore called on the CBN to continue the implementation of policies that boost capital inflows and deepen foreign exchange liquidity.
It also adjusted the Standing Facilities corridor around the MPR to +250/-250 basis points, adjusted the Cash Reserve Requirement (CRR) for commercial banks to 45 per cent while retaining that of merchant banks at 16 per cent.
The committee also introduced a 75 per cent CRR on non-Treasury SA public sector deposits and kept the Liquidity Ratio unchanged at 30.00 per cent.
The Committee’s decision to lower the monetary policy rate was predicated on the sustained disinflation recorded in the past five months, projections of declining inflation for the rest of 2025 and the need to support economic recovery efforts.
The MPC expressed satisfaction with the prevailing macroeconomic stability, evidenced by the improvements in several indicators. These include the sustained disinflation, improved output growth, stable exchange rate and robust external reserves.
It particularly noted the increased momentum of disinflation in August 2025, being the highest in the past five months.
This deceleration, underpinned by monetary policy tightening, exchange rate stability, increased capital inflows, and surplus current account balance, have helped to broadly anchor inflation expectations.
Other factors that contributed to the deceleration include the continued moderation in the price of Premium Motor Spirit (PMS) and the notable increase in crude oil production.
In the view of the Committee, the stability in the macroeconomic environment offered some headroom for monetary policy to support economic recovery.
Notwithstanding the consistent deceleration in inflation, the Committee observed the persistent build-up of excess liquidity in the banking system, resulting largely from fiscal releases emerging from improved revenues.
Being mindful of the need to preserve the prevailing macroeconomic stability, the MPC noted the risk posed by excess liquidity in the banking system.
Members noted that effective functioning of the interbank market remains critical to enhanced transmission of monetary policy.
This, therefore, informed the decision to adjust the width of the standing facilities corridor to boost interbank market transactions and enhance the stability of the market.
What the CBN is doing
Announcing the outcome of the September MPC meeting in Abuja, CBN Governor Olayemi Cardoso said the change in policy stance was based on review of macroeconomic developments.
According to him, the decision by the MPC to ease the policy stance was made in the light of improving inflation trends.
“The committee’s decision to lower the monetary policy rate was predicated on the sustained disinflation recorded in the past five months, projections of declining inflation for the rest of 2025 and the need to support economic recovery efforts,” Cardoso said.
Cardoso explained that the introduction of new measures was aimed at strengthening monetary control, improving liquidity management, and reinforcing the TSA regime.
Monetary policy perspectives
In its efforts to tame inflation, the CBN recently hosted the Monetary Policy Forum 2025, featuring fiscal authorities, legislative, private sector, development partners, subject-matter experts, and scholars with the theme: “Managing the Disinflation Process”.
The forum is a major push to improve monetary policy communication, foster dialogue, and collaborate on critical issues shaping monetary policy.
During the event, Cardoso explained that the apex bank’s focus is to sustain price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and ease economic hardship.
He said the apex bank is continuing its disciplined approach to monetary policy, aimed at curbing inflation and stabilising the economy.
Cardoso reiterated that the goal of the CBN is to ensure that monetary policy remains forward-looking, adaptive, and resilient.
In addressing our economic challenges, collaboration is key: “Managing disinflation amidst persistent shocks requires not only robust policies but also coordination between fiscal and monetary authorities to anchor expectations and maintain investor confidence,” Cardoso said.
“Our focus must remain on price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and ease economic hardship,” he added.
The CBN also focused on strengthening the banking sector, introducing new minimum capital requirements for banks (effective March 2026) to ensure resilience and position Nigeria’s banking industry for a $1 trillion economy.
These reforms and developments reflect the Bank’s commitment to creating an enabling environment for inclusive economic development. However, achieving macroeconomic stability requires sustained vigilance and a proactive monetary policy stance.
“As we shift from unorthodox to orthodox monetary policy, the CBN remains committed to restoring confidence, strengthening policy credibility, and staying focused on its core mandate of price stability,” Cardoso stated.
He said moving from the exchange rate targeting framework to the inflation targeting framework aligned with the apex bank’s determination to bring inflation upsurge under control in line with its price stability mandate.
Inflation uptick has remained a major concern to the CBN and is the time to use monetary policy tools to control it.
The National Bureau of Statistics (NBS) latest Consumer Price Index (CPI) report showed that headline inflation rate dropped from 21.88 per cent in July to 20.12 per cent in August.
For the CBN-led MPC, inflation has continued to moderate, and the naira has remained relatively stable.
Views from stakeholders
Partner & Corporate Finance Expert at TNP, Bukola Bankole, said that by lowering the benchmark rate by 50bps to 27 per cent, the MPC made a modest but symbolic move as it marks the first break from months of aggressive tightening. For businesses already borrowing at rates above 30 per cent however, this adjustment will not ease financing costs immediately, but it signals recognition that growth cannot be perpetually stifled in the name of inflation control.
“For investors, Nigeria’s yield story remains unchanged because even after the cut, local instruments remain among the most attractive across frontier and emerging markets. So, a half point change does little to alter that. The real test is whether inflation starts to ease and whether the Naira can achieve meaningful stability.
“As we all know, inflation in Nigeria is not demand-driven; it is cost-push, reflecting exchange rate volatility, the knock-on effects of subsidy removal, high energy costs, and food supply disruptions. So certainly, against this backdrop, further hikes would have been the wrong medicine,” she said.
“I will say this MPC decision reflects an effort to balance vigilance on inflation with the need to create space for credit expansion and investment. The real challenge however remains consistency, as without predictable policy, stronger fiscal alignment, and structural reforms that address the root causes of inflation, this cut will remain symbolic as with a lot of other actions previously taken.
“If those elements are however in place, then this small cut could truly mark the beginning of a more sustainable policy mix that supports growth without abandoning the fight for price stability.”
Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, said the remainder of 2025 appears poised for a stronger performance, with foreign currency inflows and stable commodity prices providing support. December is shaping up as an upbeat period, boosted by diaspora remittances, “Detty December”, and increased spending on concerts, films, and festivals.
“The naira should remain stable around N1,500–N1,550/$, and headline inflation could ease to 20 per cent. The MPC is also likely to cut rates in November, sustaining optimism into the festive season,” he said.
Rewane, said that with inflation easing for the fifth consecutive month to 20.12 per cent in August, the MPC’s decision to cut interest rate by 50 basis points slightly reduced the government’s debt service burden while keeping yields attractive enough to sustain Foreign Portfolio Investment inflows.
Head of Research at Commercio Partners, Ifeanyi Ubah, explained that food inflation declined both on a year-on-year and month-on-month basis, supported by increased commodity supply as we are in the harvest season.
“This easing in food inflation is a positive signal for the MPC,” he stressed, adding that the continued moderation in food prices gave the MPC greater confidence to implement a rate cut.
Interestingly, the Cordros Securities analysts said: “The MPC is reassessing its current policy stance, supported by sustained improvements in key indicators (inflation and the exchange rate) and a more positive outlook. The Committee considered recent shifts globally to monetary easing, following the US Fed’s rate cut and the prospect of further policy accommodation in near future periods. This should be positive for capital flows into emerging and frontier markets, including Nigeria, adding an additional layer of support to engender continued exchange rate stability.
“That said, we expect the Committee to remain cautious, balancing growth-supportive measures with its core mandate of maintaining price stability. Specifically, we believe that the monetary easing will be carefully calibrated in an effort to ensure that interest rates remain competitive enough to continue to attract capital inflows and anchor inflation expectations,” they said.
Also, the naira continued to appreciate in September, trading at an average rate of N1,530/$ in the first half of the month. It peaked at N1,541/$ on September 1 before following an upward trend to reach its strongest level of N1,520/$ on September 8.
This appreciation is driven by a 26 per cent year-on-year increase in foreign exchange inflows and the Central Bank of Nigeria’s contractionary monetary policy aimed at curbing inflation.
“As inflation gradually eases, investor confidence improves, strengthening the naira by enhancing purchasing power and easing pressure on the exchange rate. With December approaching, heightened economic activity and festive spending are expected to inject more dollar liquidity into the economy. It’s also worth noting, that the main crop cocoa is underway till January; this typically leads to higher export earnings, providing additional support for the naira’s positive momentum,” they said.
Global perspectives to monetary policy
The MPC took a cue from the US Federal Reserve which for the first time this year, lowered the federal funds rate, after five consecutive sessions of holding rates steady, cutting the policy rate by 25bps to a range of 4 per cent to 4.25 per cent at its September meeting.
The decision reflects the Fed’s increasing focus on labour market weakness, as rising unemployment risks outweigh lingering inflationary pressures.
Elsewhere, the Bank of England cut its benchmark rate by 25bps to four per cent in August, citing subdued growth and a weakening labour market, but held it steady in September amid concerns over upside risks to medium-term inflation.
Meanwhile, the European Central Bank maintained its key policy rates, including the deposit, main refinancing operations, and the marginal lending facilities, at two per cent, 2.15 per cent, and 2.40 per cent, respectively, at the September policy meeting, marking the second consecutive period after a cumulative 100bps decrease this year. The decision to keep rates steady was driven by the need to balance easing inflation with resilient economic conditions and external uncertainties.
The Central Bank of Nigeria (CBN) is strengthening regulatory effectiveness in the financial services sector through sweeping structural reforms. Its latest policies expand supervisory frameworks, clarify institutional responsibilities, and extend oversight beyond core prudential issues to cover non-prudential concerns such as governance, consumer protection, and market conduct, as well as emerging risks like cyber threats and fintech disruptions. With new compliance directives to banks, Payment Service Banks, and Other Financial Institutions, the apex bank aims to entrench stronger regulatory discipline and broaden industry-wide accountability, reports Assistant Editor COLLINS NWEZE
The Nigerian financial sector has, for years, needed stability and robust regulatory oversight to thrive. Central to this mission is the Central Bank of Nigeria (CBN), whose statutory role includes ensuring sound banking practices and safeguarding financial stability through effective surveillance.
Empowered by the Banks and Other Financial Institutions (BOFIA) Act of 2020, the CBN also bears responsibility for promoting an efficient payments system anchored on a resilient financial architecture. To achieve this, the apex bank routinely issues policies and regulations that entrench strong oversight, uphold prudential standards, and foster confidence in the system. Beyond its core supervisory functions, the CBN has consistently played a developmental role, extending its influence across critical sectors of the economy—including finance, agriculture and industry. These broad mandates are executed through its specialised departments, ensuring that the bank’s objectives are pursued with precision and impact.
Under the leadership of Governor Olayemi Cardoso, the Bank has sharpened its focus on economic reforms and targeted policies designed to restore macroeconomic stability. Through transparent market operations, improved coordination between monetary and fiscal authorities and deliberate measures to rebuild public trust, the CBN is working to stabilise the exchange rate, curb inflation, strengthen banks’ capital buffers, and create an enabling environment for both businesses and individuals to succeed.
Equally important is the promotion of ethics and professionalism within the financial system. Recognising that the integrity of bankers and treasurers is fundamental to market stability, the CBN has introduced the FX Global Code to guide authorised dealers and market participants. This initiative underscores the Bank’s commitment not only to prudent regulation but also to embedding international best practices in Nigeria’s financial markets. “At the Central Bank, we have intensified surveillance of market activities to ensure compliance and eliminate bad actors who attempt to undermine the system. Together, we must build a market based on strong governance and transparency. As regulators, we will maintain a zero-tolerance approach to compliance violations,” he said.Last week, the apex bank expanded the mandate of its newly created Compliance Department. In a circular to banks, Payment Service Banks, and Other Financial Institutions, the apex bank announced that the department, established in the first quarter of this year, will now oversee four key areas. These include Financial Crime Supervision (AML/CFT/CPF and sanctions compliance), Market Conduct Supervision (disclosure practices, complaints frameworks, advertising standards), Enterprise Security Supervision (cybersecurity, data protection, third-party risk management), and Corporate Governance and ESG Supervision (board effectiveness, ESG oversight). Director Olubunmi Ayodele-Oni said the move aims to enhance surveillance and global best practices.
“When operations commenced in Q2 2025, responsibility for the oversight of non-prudential risk areas was formally reassigned to the Department. This structural reform forms part of the Bank’s broader efforts to consolidate and embed regulatory effectiveness within existing supervisory frameworks, clarify institutional responsibilities, and maintain focused oversight of non-prudential and emerging risks,” it said.
The apex bank explained that, henceforth, all regulatory reports, correspondence and related enquiries concerning these matters should be directed to the Director, Compliance Department through the established communication channels. “Financial institutions will receive direct communication from the Department regarding specific points of contact and submission procedures. The CBN looks forward to continued cooperation from all institutions in ensuring a smooth transition and in upholding the highest standards of compliance with applicable regulatory requirements,” it stated.
What the apex bank is doing
According to Cardoso, the banking sector remains robust with key indicators reflecting a resilient system. “The non-performing loan ratio remains within the prudential benchmark of five per cent, showcasing strong credit risk management. The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 per cent, a level which ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test conducted also reaffirmed the continued strength of our banking system,” he said.
Also, to ensure that the banking system can effectively support the growth of the nation’s economy, efforts to strengthen banks’ capital buffers were announced in 2023 with a two-year implementation window. According to him, the banking sector remains in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMEs and supporting investment in critical sectors of our economy. In the same vein, he said Other Financial Institutions (OFIs) hold significant potential to drive productivity and economic growth by expanding access to credit and financial services for underserved individuals and businesses.
“To unlock this untapped potential, we aim to strengthen key institutions—particularly Primary Mortgage Banks (PMBs) and Microfinance Banks (MFBs)—to enhance their efficiency and impact. Our strategy includes implementing model mortgage foreclosure laws to stimulate lending and reduce delinquency, integrating PMBs and MFBs into the GSI platform to minimise non-performing loans, and leveraging Development Finance Institutions (DFIs) more effectively to provide increased on lending facilities to well-managed OFIs,” he added.
Entrenching efficiency, best practices
At the unveiling of the Central Bank of Nigeria’s (CBN) 2024–2028 Strategic Plan at the Bank’s headquarters, Governor Cardoso outlined the vision of the institution: to be a trusted and respected central bank that promotes confidence in the economy. He explained that this would be driven by five strategic themes carefully designed to address the nation’s most critical economic and financial challenges.
The first theme, Price Stability and Monetary Policy Effectiveness, will anchor the Bank’s resolve to leverage established monetary policy instruments, supported by rigorous data analysis, to maintain price stability. The second, Robust and Resilient Financial System, focuses on strengthening the financial sector while embedding financial inclusion objectives into policy design to broaden access to affordable products that support sustainable growth. Cardoso added that the third theme, Governance, Compliance and Advisory Partner to the Federal Government, reflects the CBN’s commitment to act as a transparent, reliable, and trusted advisor in shaping economic policies. Recognising the critical role of people, processes, and technology, the fourth and fifth themes—Excellence in Central Banking Operations and An Impact-Focused High-Performance Organisation—will ensure operational efficiency and strengthen the Bank’s institutional capacity.
The Governor further highlighted core values such as integrity, meritocracy, professionalism, accountability, courage, and tenacity as guiding principles for delivering professionalism, transparency, and accountability to Nigerians. Commending the Strategy Management Department for developing the plan in-house without external consultants, he urged all CBN staff to uphold ethics, good governance, and transparency in executing the strategy. He also stressed that the plan was not for the CBN alone but for all Nigerians, calling on stakeholders to collaborate in building a more prosperous nation and repositioning the Bank as a credible institution at the forefront of economic transformation.
Staff members described the plan—CBN’s fourth strategic cycle after those of 2012–2015, 2015–2019, and 2021–2024—as a bold repositioning of the Bank to its core mandate. They expressed appreciation to management and the Strategy Department for delivering the first entirely in-house strategy within record time. The launch climaxed with the unveiling of the theme “Repositioning for Impact,” which stakeholders said resonates with the CBN’s mission, vision, and values. They lauded the Bank’s leadership and workforce for their unity of purpose and reaffirmed their commitment to supporting the effective execution of the strategy.
What the law says
The 2007 CBN Act mandates the apex bank to promote financial system stability as one of its core objectives. To achieve this, the apex bank has, over the years, implemented reforms aimed at strengthening the banking sector, improving access to finance, building institutional capacity, and entrenching sound corporate governance practices. These measures are designed to safeguard the system, protect depositors, and sustain confidence in the economy.
Highlighting the importance of stability, the President of the Bank Customers Association of Nigeria (BCAN), Dr. Uju Ogubunka, explained that the collapse of financial institutions, especially banks, carries grave risks. Such failures, he noted, can erode public confidence, trigger a sudden contraction in money supply, reduce savings and investments, and even collapse payment systems—all with devastating effects on the real economy.
Under the leadership of Governor Cardoso, the CBN has also embarked on deliberate efforts to improve the functioning and transparency of the foreign exchange (FX) market. These reforms have yielded remarkable results. For instance, the average daily turnover in the Nigerian Autonomous Foreign Exchange Market grew by 226 per cent in the first half of last year compared to the same period in 2023. Similarly, foreign portfolio inflows rose by more than 72 per cent, reflecting improved investor confidence in the Nigerian economy. At the same time, the country’s foreign exchange reserves increased significantly—from $32 billion in May 2023 to over $41.5 billion. This figure represents the equivalent of 10 months of import cover, the highest level in almost three years, and a buffer that strengthens the economy against external shocks.
The market has also proven more efficient in facilitating capital mobility. Over the past year, it supported more than $9 billion in capital outflows, enabling investors to repatriate capital and dividends freely. This marks a sharp departure from past experiences when such repatriations were delayed for months, undermining confidence in Nigeria’s financial markets. Cardoso has emphasised that these gains are being consolidated through enhanced surveillance of market activities. The CBN has intensified its monitoring to ensure strict compliance with rules and to weed out bad actors seeking to manipulate or destabilize the system. Taken together, these reforms demonstrate the apex bank’s determination to stabilise Nigeria’s financial sector, protect investors, and foster a resilient economy capable of supporting long-term growth.
“Together, we must build a market based on strong governance and transparency. As regulators, we will maintain a zero-tolerance approach to compliance violations. Within the banking sector, I am pleased to note that the sector remains robust with key indicators reflecting a resilient system. The non-performing loan ratio remains within the prudential benchmark of five per cent, showcasing strong credit risk management,” he said.
Cardoso added: “The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 percent, a level which ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test conducted also reaffirmed the continued strength of our banking system.”
The naira is expected to remain stable, underpinned by robust FX liquidity and an efficient FX market. Specifically, analysts expect sustained inflows from foreign portfolio investors (FPIs) due to stronger market confidence. Additionally, improving non-oil exports, as well as limited incentives for naira speculation, are expected to reinforce steady inflows from domestic sources, reports Ibrahim Apekhade Yusuf
The long-term stability of the naira has been predicted given the rising inflows of foreign capital and surge in foreign reserves levels.
In the last one week, the naira appreciated by 1.1 per cent to N1,520.00/$, supported by the Central Bank of Nigeria (CBN’s) intervention of $50.00 million, and increased inflows from Foreign Portfolio Investments (FPIs) following the Open Market Operation (OMO) auction.
President, Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, says with more foreign exchange inflows into the economy, the long-term stability of the naira is expected.
Already, data from the National Bureau of Statistics (NBS) showed that capital inflows into the economy hit $5.6 billion in the first quarter of 2025.
The inflows represent significant gains from diverse reforms instituted by the Central Bank of Nigeria (CBN) to make Nigeria attractive destination for local and foreign investors. For many stakeholders, the $3.1 billion inflows to the banking sector, representing 55.44 per cent of the total capital inflows.
Analysts from Cordros Securities who predicted long-term naira stability, further explained that gross FX reserves increased to the highest level since December 2021, growing by $353.47 million week-on-week to $41.08 billion on August 21, and further rose to $41.10 billion on August 22.
According to CBN data, the reserves earlier hit $40.72 billion on August 13, driven largely by rising forex inflows and marginal increase in crude oil output.
According to the apex bank, the gross reserves moving average stood at $39.3 billion on August 1, and reached $39.5 billion on August 6, and hit $40.2 billion on August 8.
The sustained reserves accretion, decline in inflation rate, commodities prices dip as well as long-term naira stability are all positive fallout of the ongoing economic reforms instituted by the federal government.
Aside the reserves, the naira has also seen sustained stability while the inflation rate has continued to decline, closing July at 21.88 per cent.
Part of the reserves accretion was triggered by the FX reforms, instituted by the Olayemi Cardoso-led CBN, new policies instituted by the Federal Government to boost local production, reduce forex demand pressure, and lessen domestic prices have been instrumental to macroeconomic stability.
The expectations are that the apex bank sustains the forex reforms while the fiscal authority strengthens efforts at enhancing FX earnings, especially from gas, oil and non-oil exports.
President, Association of Bureaux De Change Operators of Nigeria, Dr. Aminu Gwadabe, said the apex bank under Cardoso has been cultivating multiple FX sources to increase dollar inflows, boost dollar access to manufacturers and retail end users.
“From moves to improve diaspora remittances through new product development, the granting licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller FX model, and enabling timely access to naira liquidity for IMTOs, the apex bank has simplified dollar-inflow channels for authorized dealers and other players in the value chain,” he said.
How it started
The CBN had embarked on a series of bold reforms to attract more foreign capital to the economy, achieve price and exchange rate stability.
In 2023 the new administration and the CBN-led by its Governor, Olayemi Cardoso liberalized the foreign exchange market, stopped central bank financing of the fiscal deficit, and reformed fuel subsidies. The government also strengthened revenue collection and took strategic steps to reduce surging inflation rate.
Since these reforms were implemented, international reserves have increased, and anyone can now access foreign exchange in the official market.
Nigeria successfully returned to international capital markets last December and was recently upgraded by rating agencies. A new domestic, private refinery is positioning Nigeria up the value chain in a fully deregulated market.
CBN’s policies, including the currency reforms, led to investment inflows from abroad, and reduced interventions in the domestic forex market.
The unification of exchange rates and the clearing of over $7 billion FX backlog raised the country’s investment outlook, with multilateral organizations, like the World Bank describing it as bold intervention to improve the economy’s sustainability in the long run.
Also, Nigeria’s sovereign risk spread has fallen to the lowest level since January 2020, erasing the premium accumulated during the pandemic and subsequent strain on its economy. All these are deliberate efforts to woo investors and sustain capital inflows to the economy.
More foreign capitals flow in
According to the latest “Nigeria Capital Importation Q1 2025” report released represents 10.86 per cent surge from the $5.1 billion reported in fourth quarter of 2024.
“In Q1 2025, total capital importation into Nigeria stood at US$5642.07 million, higher than $3.37 billion recorded in Q1 2024, indicating an increase of 67.12 per cent. In comparison to the preceding quarter, capital importation increased by 10.86 per cent from $5.08 billion in Q4 2024,” the report stated.
The NBS also stated that portfolio investment ranked top with $5.2 billion, accounting for 92.25 per cent, followed by other investment with $311.17 million, accounting for 5.52 per cent.
The report indicated that, “Foreign Direct Investment recorded the least with $126.29 million accounting for 2.24 per cent of total capital importation in Q1 2025.”
According to the NBS, the banking sector took the lead with the highest inflows in Q1 2025.
The report stated, “The Banking sector recorded the highest inflow with $3.1 billion, representing 55.44 per cent of total capital imported in Q1 2025, followed by the Financing sector, valued at $2.09 billion (37.18 per cent), and Production/Manufacturing sector with $129.92 million (2.30 per cent).”
The report further noted that capital importation during the reference period originated largely from the United Kingdom with $3681.96 million, showing 65.26 per cent of the total capital imported.
In emailed note to investors, Managing Director, Afrinvest West Africa Limited, Ike Chioke, explained that Portfolio Investment (92.2 per cent of total capital) dominated flows, rising by 30.1 per cent quarter-on-quarter, and 150.8 per cent year-on-year to $5.2 billion.
The bulk of the FPI flows was to Money market instruments (up 162.2 per cent year-on-year to $4.2 billion), while Bonds (up 108.5 per cent) and Equities (up 137.7 per cent) attracted $877.4 million and $117.3 million respectively.
Opportunities in GDP numbers
Nigeria’s hope of achieving $1 trillion economy by 2030 will gain significant support from the banking sector.
Nigeria’s statistician-general, Adeyemi Adeniran, had explained how the economy fared in the rebased Gross Domestic Product (GDP) report. He said: “In nominal terms, the rebased GDP for 2019 stood at N205.09 trillion N213.63 trillion in 2020, N243.30 trillion in 2021, N274.23 trillion in 2022, N314.02 trillion in 2023, and N372.82 trillion in 2024”.
The NBS noted that in 2019, the rebased nominal GDP at basic prices represented an increase of 41.7 per cent over the nominal GDP of 2019 of the old base year (2010), 39 per cent in 2020, 38.7 per cent in 2021, 36.1 per cent in 2022, 34.6 per cent in 2023 and 35.4 per cent in 2024.
“The results show that the structure of the Nigerian economy has changed significantly with a rise in the share of agriculture and services sectors and a fall in the share of the industries sector in nominal terms, indicating a shift in the structure of the Nigerian economy than earlier reported,” the NBS said.
Adeniran further explained that the rebasing allows the country to better reflect the realities of the economy. “It’s not just about a bigger number but about accurate, timely data that supports smarter policy and economic planning,” he said.
How the banks stand
A well-recapitalised banking sector is undeniably crucial for the growth of the domestic economy. Hence, Olayemi Cardoso, Central Bank of Nigeria (CBN) governor, advised banks to prepare for a new round of recapitalisation to ensure they have the necessary capital to support the Federal Government’s plan to achieve $1 trillion Gross Domestic Product (GDP) target by 2030.
He said that President Bola Ahmed Tinubu’s economic plan aims to reach a $1tr GDP by 2030, emphasising that the current bank capitalisation is insufficient to support such a large economic scale.
Cardoso asked: “Will Nigerian banks have sufficient capital relative to the financial system’s needs in servicing a $1tr economy in the near future? In my opinion, the answer is “No!” unless we take action. That action was the ongoing recapitalisation of banks, meant to prepare them for expansion and attract big ticket transactions to support economic growth”.
The Policy Advisory Council report on the national economy, had set an ambitious goal of achieving a GDP of $1 trillion, with clearly defined priority areas and strategies.
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Adeniran revealed that incorporated new and emerging sectors, consumption baskets update, and data collection refining methods helped produce a more complete picture of national output.
Aliyu Ilias, developmental economist, noted that several sectors have previously remained uncaptured in official data, particularly entertainment. “By rebasing our GDP now, included those areas properly. This new visibility will make Nigeria appear much stronger to foreign investors, which will naturally help us attract more capital,” he said.
He explained that the exercise will also reveal untapped economic potential and guide government resource allocation. “It will show where we are strongest structurally, such as in mining or other emerging sectors. That insight will help the government focus its efforts more strategically.”
“Finally,” he added, “it will support economic policy formulation, helping us align our strategy with the reality on the ground. We will know exactly where to put more effort.”
More so, while the US President Donald Trump’s widening trade war has taken emerging markets on a wild ride, Nigeria has quietly held its own, attracting foreign capital reassured by currency reforms and other measures designed to revive the economy of Africa’s most-populous nation.
“Nigeria appears to be back in business as long-awaited economic reforms take shape,” said Emre Akcakmak, portfolio manager at East Capital. Key measures include improved currency liquidity, leeway for investors to repatriate their profit, and the stable naira.
“We feel the Central Bank of Nigeria will continue to stem any sharp appreciation of the naira to limit profit taking from the fast money community,” Akcakmak said.
“Portfolio inflows have likely been supported by improved confidence amid key structural reforms, better FX market functioning and moderating dollar-naira volatility, as well as the still-robust nominal yield buffer,” said Samir Gadio, head of Africa strategy at Standard Chartered Plc told Bloomberg.
“Besides, Nigeria’s local market is seen as less correlated with global risk conditions than more liquid EM peers,” he said.
Going forward, the CBN anticipates a steady uptick in reserves, underpinned by improved oil production levels, and a more supporting export growth environment expected to boost non-oil FX earnings and diversify external inflows.
The CBN remains committed to prudent reserve management, transparent reporting, and macroeconomic policies that support a stable exchange rate, attract investment, and build long-term resilience.
The Monetary Policy Committee (MPC) will meet on July 21-22 in Abuja for its 301st meeting. Stakeholders have expressed divergent views on the likely decision of the MPC team. While some expressed confidence that given current moderation in inflation rate and exchange rate stability, a marginal reduction in Monetary Policy Rate (MPR) is likely. For others, the MPC will maintain its policy stance despite signs of disinflation and FX stability. Whichever where the pendulum swings, MPC decision should sustain price and exchange rate stability while guaranteeing continuous FX inflows to the domestic economy, reports Collins Nweze
The Central Bank of Nigeria (CBN)-led Monetary Policy Committee (MPC) will hold the 301st meeting in Abuja later this week. The meeting presents opportunity for the those who hold the levers of the economy to take crucial decisions on moderating interest rate, keeping inflation rate on decline and sustaining exchange rate stability.
At its last meeting in May, the MPC team voted to hold the benchmark policy rate at 27.50 percent. The decision reflected cautious optimism amid improving macroeconomic fundamentals. The Committee had noted that narrowing gaps between the official and parallel exchange rates, falling prices of Premium Motor Spirit (PMS), and a favourable trade balance signaled potential easing in inflationary pressures.
Members also acknowledged relative stability in the foreign exchange market and emphasised the importance of sustaining ongoing monetary reforms to reinforce market confidence.
During the May meeting, the MPC had warned that reinflationary pressures were still significant, arguing that maintaining elevated interest rates was necessary to mitigate those risks. The Committee also raised concerns that any premature rate cut might destabilise the naira, especially as the current FX rate gains have been supported by attractive yields on Open Market Operation (OMO) bills.
For the 301st meeting, analysts at Afrinvest Securities Limited anticipate that the MPC will maintain its policy stance despite signs of disinflation and foreign exchange stability.
They attributed their projection to continued external risks, food supply shocks caused by recent insecurity and flooding, and uncertainties arising from the delayed release of Nigeria’s rebased GDP figures for Q1 2025.
Afrinvest West Africa said inflation could drop as low as 22.2 per cent in June 2025.
“Our view for the inflation projection is hinged on two major drivers. Firstly, the effect of the CBN’s strategic policy reforms has seen the naira strengthen in the month of June, up 3.6 per cent to close at N1,529.71. Secondly, the high base year effect from last year’s 34.2 per cent inflation reading is a contributing factor,” Afrinvest stated.
But Managing Director, Financial Derivatives Company (FDC) Limited, Bismarck Rewane, called for interest rate slash by 25 basis points to 25 per cent.
In emailed note to stakeholders, he said the easing in the interest rate is reinforced by the latest forecast from the International Monetary Fund (IMF), which anticipates inflation will decline in the fourth quarter and further ease to18 per cent in 2026.
He explained the wider implication of a fall in MPR including reduction of borrowing cost of small businesses and reinvigoration of productive sector.
Rewane’s FDC said inflation is expected to ease to 22.65 per cent in June, from 22.97 per cent.
FDC attributed the reduction to a combination of factors, including a N100 reduction in PMS price, relative stability in the naira exchange rate, and a decline in money supply growth.
FDC however expected food inflation to rise by 0.42 per cent to 21.56 per cent from 21.14 per cent. Core inflation is projected to decline by 1.34 per cent to 20.94 per cent from 22.28 per cent.
“The inflation numbers could have been worse if not for the relative stability of the exchange rate,” FDC noted.
FDC noted that further cut in ex-depot price by Dangote Refinery could further exert downward pressure on pump prices and potentially ease inflation.
Analysts at Cordros Securities, said that with the commencement of H2-25, there is need to continue to adopt a cautiously optimistic stance.
“The Gross Domestic Product (GDP) growth is expected to remain robust as economic strains induced by the reforms continue to ease. With domestic inflation expected to continue easing, the Monetary Policy Committee (MPC) may begin to consider a gradual pivot toward monetary easing”.
The analysts however, said the relatively tight global financial environment and uncertainties stemming from global trade tension and geopolitical instability will likely constrain the depth of rate cuts, as the CBN seeks to maintain the naira’s attractiveness for carry trade inflows.
Echoes from 300th meeting
CBN Governor Olayemi Cardoso said the apex bank is now more than ever, consolidating market gains and ensuring sustained improvement is crucial.
“We will enhance collaboration with the fiscal sector by increasing the depth and regularity of our interactions to drive economic growth. With stabilising forex rates, strengthened price controls, and rising investor confidence, the economy shows strong signs of resilience and recovery,” he said.
Cardoso explained that following positive developments in the FX market, the CBN’s focus on boosting liquidity and maintaining transparency in forex operations is sacrosanct.
“Our Objectives have been and will continue to be, to achieve stability in the Foreign Exchange and the Financial markets. CBN will continue to embrace orthodoxy and stay the course. We remain vigilant and will not take anything for granted, inflation has been too high for too long, and our goal is to bring it down from double digits to single digits in the medium to long term,” he said.
The naira strengthened by 6.95 per cent to N1,510/$ in the parallel market on February 20, driven by exchange rate expectations, subdued forex demand, and sustained CBN intervention.
Businesses, especially real sector operators applauded the MPC decision to hold rates, so as to sustain naira rally and cut rising cost of borrowing.
These decisions were based on the fact that the Committee anticipates robust GDP growth in the medium term, driven by strong contributions from the non-oil sector. Additionally, the MPC noted the sustained rise in domestic crude oil production (1.74mb/d) and expects an improved contribution from the oil sector, further strengthening overall GDP growth.
The MPC acknowledged the rebasing of the CPI as well as the adjustments in the weights of items in the CPI basket, citing that the new methodology reflects current consumption patterns. Furthermore, the Committee expects inflationary pressures to moderate in the near future, helped by a relatively stable naira and gradual moderation in PMS prices.
The MPC highlighted the recent naira appreciation buoyed by improved FX liquidity. The Committee also acknowledged the current measures by the CBN to foster transparency and credibility in the FX market, including the implementation of the Electronic Foreign Exchange System (EFEMS) and the Nigerian Foreign Exchange Market (NFEM) FX Code.
The Committee expects the sustained policy initiatives to improve Foreign Direct and Portfolio investments as investors’ confidence increases. The MPC also highlighted that the increased domestic crude oil production is expected to improve the current account balance and support FX reserve accretion.
On the global scale, the Committee noted that while the Russia-Ukraine war and Middle Eastern conflicts remain downside risks to global GDP, potential resolutions could emerge following policy actions by the new US administration. Additional risks include a possible global trade war driven by US tariff hikes, which may heighten inflationary pressures and weigh on global growth. However, the MPC highlighted that the IMF has maintained its global GDP growth forecast at 3.3 per cent for both 2025 and 2026.
Views from stakeholders
Looking ahead, analysts at Cordros Securities expect future MPC decisions to be primarily influenced by developments in the FX market and the trajectory of inflation. “While a potential rate cut could be considered at the May policy meeting, we anticipate a gradual approach aimed at balancing exchange rate stability with the anticipated disinflationary process,” they said in emailed notes to investors.
Analysts said that before the MPC meeting, market participants had already begun repricing yields downward despite the tight liquidity conditions in the financial system.
Rewane, said global and domestic economic landscape is shifting, and Nigeria’s policymakers are navigating treacherous waters. Balancing risks remains delicate – tighten too much, and suffocate growth; ease too soon, and inflation spirals.
“In its first meeting in 2025, held on February 19-20, the Monetary Policy Committee (MPC) finally hit the pause button on interest rate hikes after 12 months of an aggressive tightening campaign. The restrictive stance saw the policy rate peak at 27.5 per cent per annum, pushing maximum lending rates above 30 per cent per annum. Markets perceive this move as the beginning of a more accommodating stance as the yield curve inverted, especially at the short end following the rate decision,” he said.
Speaking on the MPC decisions, the Research Head, Cowry Asset Management Limited, Charles Abuede, said the MPC is treading cautiously. “The committee should remain focused on maintaining price stability, especially as inflationary pressures persist despite previous rate hikes.
Abuede said a lower inflation print is prompting the MPC to prioritise economic growth over further tightening, particularly as other macroeconomic indicators suggest easing cost pressures. He said the MPC is gradually relaxing of the tightening of the monetary policy.
He said despite the well known disposition of the central bank, the reality of the moment required that rates be held.
Other analysts agreed that there has been some stability in the exchange rate, having regard to the fact that there is already what can regarded as an overdose of monetary policy tightening instruments.
They said: “Monetary Policy Rate (MPR) were already at around 27.5 per cent and the Cash Reserve Requirement (CRR) is already at 50 per cent, which are practically the limits that monetary policy can be pushed for now.
Interest rate now for many businesses is over 35 per cent, and it should not get worse than that. “We need to tackle food inflation which is a major factor in our current inflation. So, we need to do a lot more in the area of development finance, why the CBN continues to pursue is the orthodox monitoring policy,” he stated.
More so, analysts from the Nigeria Economic Summit Group said easing of inflation was also expected to influence monetary policy. They predicted that the CBN’s Monetary MPC may adopt a more accommodative stance in late 2025, potentially lowering interest rates to stimulate economic activity.
This shift would mark a departure from the previous tight monetary policy regime aimed at controlling inflation.
CBN’s policies, including the exchange rate unification, have led to significant foreign capital inflows to the economy while reducing the its intervention in the forex market. The floatation of the naira and the clearing of over $7 billion FX backlog improved the country’s outlook with foreign investors as well as multilateral organizations, like the World Bank describing it as bold intervention to improve the economy’s sustainability in the long run.
Global rating agency Moody’s Investors Service has upgraded Nigeria’s issuer ratings from ‘Caa1’ to ‘B3’, citing significant improvements in the country’s external and fiscal positions. The agency attributed the upgrade to recent reforms in Nigeria’s foreign exchange management framework, which have notably strengthened the balance of payments and boosted the nation’s foreign reserves. Moody’s highlighted the Central Bank of Nigeria’s (CBN) forex reforms as pivotal to the country’s current macroeconomic stability and ongoing efforts to rein in inflation, reports Assistant Editor COLLINS NWEZE
Several feedbacks from global rating agencies about Nigeria’s economic status point to steady improvement in the country’s macroeconomic indexes. For instance, Moody’s Investors Service recently upgraded Nigeria’s Issuer ratings from ‘Caa1 to B3,’ with a stable outlook, citing significant improvements in Nigeria’s external and fiscal positions. The new rating for the country also signals growing optimism about the Nigeria’s economic outlook.
The agency also revised Nigeria’s outlook to “stable” from “positive”, as it expects recent progress on external and fiscal fronts to continue, though at a slower pace, if oil prices fall. The rating agency in a statement, explained that “The recent overhaul of Nigeria’s foreign exchange management framework has markedly improved the balance of payments and bolstered the Central Bank of Nigeria’s foreign exchange reserves.”
According to Moody’s, inflationary risks in Nigeria, driven by policy shifts, have diminished. Inflation and domestic borrowing costs are showing nascent signs of easing, bolstering confidence in the stability of these policy changes, it added. “The stable outlook reflects our expectations that external and fiscal improvements will decelerate but will not reverse entirely,” Moody’s added.
Before the Moody’s report on Nigeria, another rating agency, Fitch Ratings raised Nigeria’s credit rating from ‘B-’ to ‘B’, with a stable outlook. The positive Fitch Ratings on Nigeria economy did not come as a surprise to stakeholders who have been keenly watching key economic policies from the monetary and fiscal authorities.
From exchange rate unification to reduce arbitrage in the markets, introduction of electronic FX matching platform and a new FX code to enhance transparency and efficiency in the market as well as deployment of monetary policy tightening to keep inflation on check, the Central Bank of Nigeria (CBN) has demonstrated commitment to achieving sustainable economy growth and exchange rate stability. Already, the latest Fitch rating moved Nigeria’s long-term foreign-currency issuer default rating (IDR) from negative to stable, meaning that the country stands a better chance of attracting foreign investment, borrow money on international markets at better interest rates, and boost investor confidence.
Fitch also applauded government’s commitment to policy reforms implemented since its move to orthodox economic policies in June 2023, including exchange rate liberalisation, monetary policy tightening, and steps to end deficit monetisation as well as fuel subsidies removal. “These have improved policy coherence and credibility and reduced economic distortions and near-term risks to macroeconomic stability, enhancing resilience in the context of persistent domestic challenges and heightened external risks,” the agency stated.
In his response, President Bola Tinubu described Moody’s Investors Service’s upgrade of Nigeria’s long-term foreign-currency issuer rating as a welcome development. The President described it as a significant vote of confidence in the country’s economic direction and ongoing reform agenda.’ He reaffirmed his administration’s commitment to maintaining prudent economic management while promoting inclusive growth. “This upgrade signals to global investors and partners that Nigeria is back on a path of responsibility, reform and renewed credibility. It underscores our unwavering commitment to transparency, discipline and prosperity for all Nigerians.
“This positive rating reinforces global confidence in Nigeria’s future and represents a milestone in the administration’s goal of restoring investor trust, unlocking economic potential, and securing long-term prosperity. The upgrade reflects growing international recognition of Nigeria’s progress in stabilising its macroeconomic environment, enhancing fiscal transparency, improving debt sustainability, and implementing market-oriented reforms under President Tinubu’s leadership.”
An analyst, Dr. Wahab Balogun, Managing Director and Chief Executive Officer of Ambosit Capital Managers said that a better credit rating provides a foundation for Nigeria to re-engage international capital markets under more favourable terms, potentially reducing debt service costs and freeing up fiscal space for development spending. “With the stable outlook assigned by Moody’s, Nigeria is not expected to face an imminent downgrade or upgrade. This indicates that the reforms currently in place are perceived as credible, with no immediate risks that could undermine the rating. It also reinforces the view that the government’s policy direction is yielding early positive results, though sustained implementation will be necessary to achieve long-term benefits,” he said.
He added that “the dual upgrades by Fitch and Moody’s have been received in financial and investment circles as indicators of Nigeria’s return to a path of responsible economic management, capable of restoring the country’s standing in global finance.”
As Nigeria seeks to attract more private capital—both domestic and international—to power its development priorities, the improved ratings could become a useful lever in supporting long-term plans for economic diversification, infrastructure development, and inclusive growth.
Policies supporting positive ratings
The CBN recently took strategic step to enhance transparency and boost market confidence with the inauguration of the Nigeria Foreign Exchange Code (FX Code) in Abuja. The FX Code has so far ignited naira stability at both official and parallel markets. CBN Governor Olayemi Cardoso, recently launched the FX Code, emphasising integrity, fairness, transparency, and efficiency as critical pillars for driving Nigeria’s economic growth and stability. He emphasised that the FX Code was built on six core principles: ethics, governance, execution, information sharing, risk management and compliance, as well as confirmation and settlement processes.
These principles, he explained, aligned with international standards while addressing the unique challenges within Nigeria’s foreign exchange market. According to Cardoso, “The FX Code represents a decisive step forward, setting clear and enforceable standards for ethical conduct, transparency, and good governance in our foreign exchange market. The era of opaque practices is over. The FX Code marks a new era of compliance and accountability. Under the CBN Act 2007 and BOFIA Act 2020, violations will be met with penalties and administrative actions.”
The CBN has stated that while every effort has been made to ensure that the FX Code comprehensively addresses various aspects of market conduct and practice, it is not intended to be exhaustive. Governor Cardoso also noted that the journey towards market reform is already yielding results. He stated, “The year 2024 was marked by structural reforms that sought to return the naira to a freely determined market price and ease volatility as several distortions were removed from the market.”
Beyond the foreign exchange market, the FX Code forms part of the CBN’s renewed focus on compliance across the financial sector. Its six guiding principles, alongside 52 sub-principles, were designed to become the benchmark for conduct across all participating institutions. Issued as a guideline for the foreign exchange market, the FX Code is backed by the authority of the CBN Act of 2007 and the Banks and Other Financial Institutions Act (BOFIA) of 2020. These legislative instruments empower the CBN to establish and enforce directives regarding the standards financial institutions must follow in conducting foreign exchange business in Nigeria.
The FX Code, therefore, serves as an official directive that all market participants are expected to observe in their operations. Besides FX Code, the apex bank also introduced the Electronic Foreign Exchange Matching System (EFEMS), which has proven effective in other economies in enhancing the functionality of the foreign exchange market. The EFEMS was meant to check forex market distortions, eliminate speculative activities and instil transparency. The EFEMS, which is commonplace in developed and developing markets offers real-time information on currency rates, trading volumes, and market activity.
Other highlights of the ratings upgrade
Fitch expects the macroeconomic policy stance to support the move to lower inflation and sustain improvements in the foreign exchange (FX) market’s operation, though it will likely remain much higher than rating peers. It also expects “a continued reduction in external vulnerabilities through further easing of domestic FC supply constraints, while renewed energy sector reforms should help sustain current account surpluses.”
It added: “Greater formalisation of FX activity including the Central Bank of Nigeria’s (CBN) recent introduction of an electronic FX matching platform and a new FX code to enhance transparency and efficiency, along with monetary policy tightening, has led to a greater rise in FX liquidity and general stability in the FX market after a 40% depreciation in 2024, closing the spread between the official and parallel exchange rates.
“Net official FX inflows through the CBN and autonomous sources rose by about 89 per cent in fourth quarter 2024, compared to an eight per cent rise in fourth quarter 2023. We expect continued formalisation of FX activity to support the exchange rate, although we anticipate modest depreciation in the short term.
“The CBN has tightened monetary conditions through a combination of policy rate hikes to 27.5 per cent (up 875bp since February 2024) and use of prudential and operational tools such as open market operations (at rates closely aligned to the MPR) to strengthen monetary policy transmission after years of financial repression.”
Reacting to the Fitch rating, Oladele Adeoye, Chief Rating Officer at DataPro, a Nigerian credit rating agency, said it was a positive development “in all ways.” Adeoye said it would boost investors’ confidence in Nigeria’s Eurobond as people would readily subscribe whenever it is issued. “Good rating also implies lower cost of fund. Of course, there will be inflow of foreign currency into the economy, and this will give further room for the CBN to support the local currency and strengthen exchange rate,” he said.
On how the government can improve on this, Adeoye said: “Nigeria must increase productivity that can boost export and lower import. This will enhance the external reserve and improve public finance. “We need to continue to improve our revenue base, and this includes both oil and non-oil revenue.” Registrar/Chief Executive Officer, Nigeria Institute of Credit Administration (NICA) Chartered, Prof. Chris Onalo, said the national body for credit management said the Fitch rating “means a lot.”
He said he could not agree less with the agency’s rating. “It is solid, it is stable, it is progressing, and it has a future outlook,” Onalo said. On further steps government can take on the economy, he said: “The government should focus on expanding the economy. In other words, all-inclusive economic activities. The government should fix the infrastructural problem, because that will stimulate future ratings.
“It should also reduce the cost of doing business drastically. And then fix electricity and clamp down on the local insecurity, like the insurgency is becoming a thing of the past now, but pocket pickers, people that break into offices, and you can arrest that by creating avenues for job, wider job availability for people that are regarded as forgotten miscreants.”
The Central Bank of Nigeria (CBN) has outlined clear roles for banks and International Money Transfer Operators (IMTOs) in implementing the Non-Resident Biometric Verification Number (NRBVN) policy. IMTOs are to integrate with the NRBVN platform to ensure secure, efficient global remittances, while banks must develop products tailored to diaspora needs. The effectiveness of both sectors in fulfilling these responsibilities is crucial to boosting dollar liquidity and strengthening Nigeria’s financial ecosystem for non-resident citizens, reports Assistant Editor COLLINS NWEZE
Two stakeholders at the centre of the Non-Resident Biometric Verification Number (NRBVN) policy execution are the commercial banks and International Money Transfer Operators (IMTOs). Both segments of the economy play key roles in dollar inflows to the market and have been assigned specific roles by the Olayemi Cardoso-led Central Bank of Nigeria (CBN) in the NRBVN policy implementation.
Following the recent unveiling of NRBVN in Abuja, the CBN boss directed Nigerian banks to proactively develop and offer products specifically tailored to meet the unique needs and preferences of the diaspora community. The NRBVN launch is seen as a major step to keep remittances inflow to the country soaring and dollar liquidity strong. Cardoso said that offering innovative and attractive financial solutions can greatly enhance diaspora participation, deepen financial inclusion, and significantly boost remittance inflows.
“Over the past year, our policy frameworks have undergone extensive refinements, informed by sustained dialogue with International Money Transfer Operators (IMTOs). The introduction of the willing buyer, willing seller regime, licensing of additional IMTOs, and market reforms that have facilitated currency convergence are notable examples. Consequently, remittance flows through official channels have risen markedly, from $3.3 billion in 2023 to $4.73 billion last year,” he said.
He added: “With the introduction of NRBVN and complementary policy measures, we are optimistic about achieving our ambitious target of $1 billion in monthly remittance flows, a goal we believe is entirely achievable given the growing trust and convenience in formal remittance channels”.
“To meet these targets, collaboration and compliance with established regulatory frameworks remain essential. All stakeholders must adhere strictly to the FX Code and other relevant regulatory guidelines. This is critical to ensuring market stability, integrity, and overall confidence in Nigeria’s financial system.”
The CBN boss further invited the IMTOs to integrate with the NRBVN platform as part of shared vision to build a secure, efficient, and inclusive financial ecosystem for Nigerians globally. Cardoso explained that a fully connected system will ensure that every Nigerian in the diaspora can confidently contribute to national development through trusted and cost-effective channels. He emphasised that the launch was not the final destination, but the beginning of a broader journey.
“The NRBVN is a dynamic initiative, one that will continue to evolve in response to the needs of its users. It presents a unique opportunity to learn, to innovate, and to adapt. We encourage all stakeholders to engage actively, share insights, and help shape a system that serves millions of Nigerians across geographies and generations. The NRBVN is not just a tool; it is a bridge between Nigeria and its global citizens,” he said.
He reiterated the CBN’s commitment to reducing the cost of remittances, currently averaging over seven percent in Sub-Saharan Africa. Lowering these costs, he stated, will enhance the safety and appeal of formal channels while amplifying the socioeconomic impact of diaspora remittances on Nigerian households and the broader economy.
Statistics on dollar inflows via IMTOs
The value of foreign exchange inflows to the economy through the IMTOs rose sharply in 12 months to $4.76 billion, the apex bank’s quarterly statistical bulletin showed. The report, which covered inflows in 2024, represents a significant 44.5 per cent increase from the $3.30 billion recorded in 2023. The IMTO inflows continue to be a vital source of foreign currency for Nigeria, supporting families, businesses, and the broader economy amid ongoing FX market challenges.
The year began with a strong performance in January 2024 as inflows surged 32.5 per cent year-on-year to $390.86 million, compared to $295.21 million in January 2023. This early momentum was maintained in February, with inflows increasing by 67.3 per cent, rising to $326.91 million from $195.23 million the previous year. March continued the positive trend, with IMTO inflows hitting $363.76 million in 2024, up 30 per cent from $279.79 million in March 2023. April saw a leap, with inflows reaching $466.11 million, an 83.3 per cent increase from April 2023’s $254.26 million, marking the highest year-on-year percentage growth in the first half of the year.
May recorded inflows of $404.75 million in 2024, a 45.3 per cent rise compared to $278.54 million the year before. June was a relatively flat month-on-month but still strong year-on-year, with inflows at $389.79 million, up 40.2 per cent from $278.04 million in June 2023. July and August were the standout months for IMTO inflows, posting the highest volumes of the year. In July 2024, inflows jumped to $552.94 million, more than double the $240.35 million recorded in July 2023, representing a 130% year-on-year increase.
August maintained this peak momentum with inflows rising to $585.21 million, a 116 per cent increase from $271.24 million in August 2023. These two months alone accounted for nearly a quarter of the total inflows for the entire year, highlighting their critical role in Nigeria’s FX ecosystem. The final four months of 2024 showed a mixed pattern of inflows, reflecting broader economic uncertainties and seasonal effects. September recorded $336.61 million in IMTO inflows, up 40.8 per cent from $238.98 million in the same month of 2023.
October’s inflows rose modestly to $378.85 million, a 29.1 per cent increase year-on-year. However, November saw a sharp decline, with inflows dropping by 22.1 per cent to $252.28 million from $324.20 million in November 2023. December ended the year on a more positive note, with inflows rebounding to $316.59 million, a 9.1 per cent increase compared to $348.33 million in December 2023. The surge in IMTO inflows is closely tied to the reforms introduced by the CBN under Governor Cardoso since his assumption of office in September 2023.
Opportunities for diaspora remittances
According to President, Association of Bureaux De Change Operators of Nigeria, Aminu Gwadabe, there are over 1.24 million Nigerian Migrants abroad and 50 per cent of them lives within the African neighbourhood, and the figure is expected to rise in the coming years. Gwadabe listed importance of migrant remittances to the economy to include serving as a lifeline for the recipients small house hold in the economy and used for health, nutrition, education and societal needs.
The remittances are also higher than both Foreign Direct Investment and foreign aids flow to the economy and still, are cheaper sources of funds. He said that remittances can be used infrastructural developments as seen in India and Lebanon while in the Dubai UAE, the remittances are stable sources of liquidity in the Market. The remittances, he added, can also serve as excellent source of investments funds in the economy even as it represent 83 per cent of the Federal Government budget in 2018.
The remittances were 11 times higher than the FDIs in the same period and 7.4 per cent larger than the net official development assistance received in 2017 of $3.34 billion in the economy. In a report: “Diaspora remittances: The power behind Africa’s sustainable growth”, Regional Vice President of Africa at Western Union, Mohamed Touhami el Ouazzani, said remittances may be measured through the movement of money, but their real impact is measured in lives changed.
He disclosed that in 2023 alone, $90 billion flowed into Africa from its global diaspora, an amount that rivals the Gross Domestic Product of entire nations. He said that remittances symbolise deep ties that keep communities connected across borders. “Families with a breadwinner working abroad depend on these funds to provide vital support for day-to-day needs. They also build the foundation for broader financial stability.
“Beyond their immediate impact, remittances are powerful drivers of economic change. They fuel infrastructure development, spur entrepreneurship, and promote financial inclusion – all essential for long-term economic development. Ghana’s National Financial Inclusion and Development Strategy (NFIDS) is simplifying access to remittances, while countries like Kenya, Ethiopia and Nigeria are tapping into diaspora bonds to fund infrastructure and other national projects,” he added.
Impact on financial inclusion
Financial inclusion is achieved when adult Nigerians have easy access to a broad range of formal financial services that meet their needs at an affordable cost. The services include, but are not limited to, payments, savings, loans, insurance, and pension products. Its importance derives from the promise it holds as a tool for economic development, particularly in the areas of poverty reduction, employment generation, wealth creation and improving welfare and general standard of living.
Recognising the inherent benefits of expanding financial services network, especially to Nigerians in diaspora, the CBN said NRBVN will boost financial inclusion in the country. Cardoso explained that historically, Nigerians in the diaspora have faced significant hurdles when seeking access to financial services in Nigeria.
The mandatory physical verification required for obtaining a BVN often incurred considerable costs in terms of time and financial resources, especially for individuals residing in remote locations. The NRBVN platform addresses these very concerns. Through digital verification and robust Know Your Customer (KYC) processes, Nigerians across the globe can now remotely obtain their BVN swiftly and securely.
This single digital gateway will enable seamless access to banking services, including opening accounts and securely sending funds, dramatically enhancing convenience and reducing costs. “In developing this solution, we draw valuable lessons from countries such as India and Pakistan. India’s Non-Resident External (NRE) and Non-Resident Ordinary (NRO) accounts have significantly simplified banking processes for its diaspora, and Indian banks currently hold approximately $160 billion in diaspora deposits, achieved by providing attractive and tailored products and services,” he said.
According to the CBN boss, in developing the NRBVN, the team also took cognizance of Pakistan’s innovative Roshan Digital Account, offering fully online onboarding and investment opportunities and successfully attracting nearly $10 billion since its inception. These examples, Cardoso explained underscore the power of digital financial inclusion and specifically tailored products in driving meaningful engagement and substantial economic inflows from diaspora populations.
“Our NRBVN platform is similarly designed to offer more than access, it is about opportunity. It is complemented by the Non-Resident Ordinary Account (NROA) and Non-Resident Investment Account (NRNIA) initiatives, collectively forming a robust framework designed to incentivise our global diaspora to channel their funds through formal financial systems into productive uses at home.”
“By providing investment accounts, diasporans will have access to a variety of growing investment opportunities in our debt and equities markets, as well as products such as mortgages, insurance, and pensions. Importantly, diasporans will also have the flexibility to fully repatriate the proceeds of their investments in accordance with existing regulations, ensuring confidence and convenience in managing their assets,” he said.
For the Central Bank of Nigeria (CBN), regulatory excellence and strengthening Nigeria’s financial system remain a priority. The apex regulator has consistently emphasised a strong financial system that is built on trust, and trust is earned through integrity and compliance. The CBN under current leadership continues to set high regulatory standards to protect Nigeria’s financial ecosystem and ensure its alignment with global best practices for sustained growth of businesses, and the economy, writes Assistant Editor, Collins Nweze
By fostering a strong culture of compliance and strengthening risk management frameworks, the Central Bank of Nigeria (CBN’s) leadership goal remains to protect Nigeria’s financial sector while ensuring its resilience and credibility locally and internationally.
To achieve these goals, the apex bank has reaffirmed its commitment to maintaining a transparent and resilient financial system by reinforcing regulatory compliance and risk management across Nigerian financial institutions in the course of ongoing reforms in the system.
The financial sector regulator recently held a high-level Mandatory Compliance and Anti-Money Laundering (AML) Training Workshop in collaboration with Citi, in Lagos.
During the event, the Special Adviser to the CBN Governor on Compliance, Ms. Shola Phillips, emphasised the need for strict adherence to global banking standards to sustain confidence in Nigeria’s financial sector.
“Regulators expect financial institutions to maintain dynamic, risk-based AML/CFT programmes that are responsive to the evolving financial environment. Proactive engagement with regulatory developments and the integration of innovative compliance solutions are essential for institutions to meet these expectations effectively,” Phillips stated.
The training, attended by compliance officers, trade operations specialists, and correspondent banking teams from various financial institutions, provided critical insights into global regulatory trends, emerging financial risks, and strategies for sustaining correspondent banking relationships.
Managing Director of Citi’s Correspondent Banking Group, Siobhan Ni Ealaithe, highlighted the critical role of robust governance frameworks in mitigating risks. She underscored the necessity of Know Your Customer (KYC), Know Your Business (KYB), and Know Your Transaction (KYT) protocols in preventing illicit financial activities.
Stephanie Bailey, Head of EMEA AML Risk Management for Foreign Correspondent Banking, provided a stark assessment of financial crime risks, noting that over $3 trillion in illicit funds flow through the global financial system annually. She urged financial institutions to strengthen due diligence measures, leverage technology-driven risk assessments, and uphold transparency in all transactions.
Speaking recently to bankers, Cardoso said the ethics and professionalism of bankers and treasurers are under constant scrutiny.
According to him, the apex bank introduced the FX Global Code for all authorized dealers and market participants to ensure full compliance with regulations.
He urged the Chartered Institute of Bankers of Nigeria (CIBN) to take the lead in upholding and demonstrating the highest standards in the industry.
“At the Central Bank, we have intensified surveillance of market activities to ensure compliance and eliminate bad actors who attempt to undermine the system. Together, we must build a market based on strong governance and transparency. As regulators, we will maintain a zero-tolerance approach to compliance violations,” he said.
Banking sector remains robust
Cardoso explained that within the banking sector, the sector remains robust with key indicators reflecting a resilient system.
“The non-performing loan ratio remains within the prudential benchmark of five per cent, showcasing strong credit risk management. The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 per cent, a level which ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test conducted also reaffirmed the continued strength of our banking system,” he said.
To ensure that our banking system can effectively support the growth of our economy, efforts to strengthen banks’ capital buffers were announced in 2023 with a two-year implementation window.
“I am pleased to note that a significant number of banks have raised the required capital through right issues and public offerings well ahead of the 2026 deadline! I believe that the banking sector is in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMEs and supporting investment in critical sectors of our economy,” he said.
In the same vein, Other Financial Institutions (OFIs) hold significant potential to drive productivity and economic growth by expanding access to credit and financial services for underserved individuals and businesses.
To unlock this untapped potential, the CBN aims to strengthen key institutions—particularly Primary Mortgage Banks (PMBs) and Microfinance Banks (MFBs)—to enhance their efficiency and impact.
“Our strategy includes implementing model mortgage foreclosure laws to stimulate lending and reduce delinquency, integrating PMBs and MFBs into the GSI platform to minimise non-performing loans, and leveraging Development Finance Institutions (DFIs) more effectively to provide increased on lending facilities to well-managed OFIs,” he said.
Cardoso explained that the Nigerian payments ecosystem has been ahead of many advanced economies, yet has not always received the recognition it deserves.
He said that many innovations that other countries are only now experiencing have been part of our system for years. We must celebrate these successes, as they contribute to building our global reputation.
“Nigeria’s dynamic fintech ecosystem has driven financial inclusion and positioned the country as a hub of innovation in Africa. Despite a challenging external environment, Nigerian Fintechs continue to shine, attracting significant foreign investment and several have achieved global unicorn status this year. Their innovations, alongside other financial service providers, have fueled growth in transactions and made financial services more affordable and accessible for many more Nigerians,” he stated.
According to him, there is a need to continually leverage this channel to enhance access to finance and credit, particularly for under-served populations.
However, he urged fintech companies and banks to ensure their platforms are not exploited for fraudulent activities.
“Strengthening the KYC onboarding process is essential to prevent malicious actors from exploiting our financial system. Additionally, these institutions must prioritize improving transaction monitoring and bolstering consumer protection measures to ensure that digital channels remain safe, especially for the most vulnerable segments of our population,” he said.
Recapitalisation of banks
The ongoing recapitalisation of banks comes with several benefits to the economy, including helping the lenders take bigger risks by banking underserved markets, Cardoso said.
He spoke in Lagos at the 2nd International Financial Inclusion Conference 2024, with the theme: “Inclusive Growth—Harnessing Financial Inclusion for Economic Development.”
The CBN boss said it was in line with its efforts to deepen financial inclusion, the apex bank introduced new minimum capital requirements for banks.
He said: “This strategic move ensures that banks are well-capitalised, enabling them to take on greater risks, particularly in underserved markets. With stronger capital bases, banks can provide more loans and financial products to Micro Small and Medium Enterprises (MSMEs), rural communities, and other vulnerable segments that have previously struggled to access formal financial services.”
The CBN had on March, 28, 2024 announced a two-year bank recapitalisation exercise which commenced on April 1, 2024, and is expected to end on March 31, 2026.
The recapitalisation plan requires minimum capital of N500 billion, N200 billion, and N50 billion for Commercial Banks with International, National, and Regional licenses respectively.
Cardoso said the recapitalisation policy not only strengthens financial stability but also serves as a catalyst for inclusive growth.
Furthermore, with increased capital, banks can invest in technology and innovation, crucial for driving digital financial services such as mobile money and agent banking. These technologies are key to breaking down geographic and economic barriers, bringing financial services to even the most remote areas, he stated.
With less than 14 months to recapitalisation deadline, banks have stepped up preliminary consultations on the prospect of business combinations.
Analysts said there have been “more talks around mergers and acquisitions” as banks consider alternative options to fresh capital raising.
They said while the banks are expected to flood the market with offers, many of them have seen the inevitability of mergers and acquisitions.
The CBN had approved the first mergers and acquisition deal between Providus Bank and Unity Bank in 2024. Access Holdings Plc, Ecobank Nigeria and Jaiz Bank Plc have met the new minimum capital requirements.
The CBN is the final signatory in a tripartite capital verification committee that included the Securities and Exchange Commission (SEC) and Nigeria Deposit Insurance Corporation (NDIC).
Under the guidelines for the recapitalisation, capital verification is a major requirement before the clearance of the allotment proposal and release of the funds to the bank for onward completion of the offer process and addition of the new capital to its capital base.
Experts had estimated that banks could raise about N5 trillion within the two-year recapitalisation period.
e-payment transactions soar
Electronic payment transactions in Nigeria rose to $702.6 billion in 12 months ended December 31, 2024, a report from the Nigeria Interbank Settlement System (NIBSS) has shown.
The e-payment data reached an all-time high and the first time to hit the quadrillion mark.
According to NIBSS industry statistics on e-payment report, the value recorded on the NIBSS Instant Payment (NIP) represents a 79.6 per cent increase over the $400.5mn recorded in 2023.
Although the e-payment data shows a steady increase throughout the 12 months of the year, the highest value was achieved in December 2024 because of the high level of business transactions within the month.
Being a festive period with lots of spending activities, Nigerians spent a total of $76.7bn over electronic channels in December 2024.
This came as the all-time high monthly record on the NIBSS electronic payment platform.
Also, the volume of transactions processed by NIBSS for the year also jumped from 9.7 billion in 2023 to 11.2 billion in 2024. This represents a 15.5 per cent rise in the volume of electronic transactions year on year.
Stakeholders insist that the surge in e-payment transactions can be linked to the recent cash crunch experience and the cashless policy of the CBN limiting the amount of cash that can be withdrawn daily.
The e-payment transactions are usually carried out through cheques, Automated Teller Machines (ATMs), Point of Sale (PoS), m-Cash, CentralPay, Remita, Nigeria Interbank Instant Payment (NIBSS) Instant Payment (NIP), mobile money, among other channels.
The e-payment powers were conferred on the CBN by Sections 2 (d) and 47 (2) of the CBN Act, 2007, to promote and facilitate the development of efficient and effective systems for the settlement of transactions, including the development of electronic payment systems.
While pushing for the full use of the e-payment system, the CBN said for Nigeria to actively play at the world stage, “our payment system must be successfully benchmarked against the global best practices, as in most developed nations of the world.”
It said e-payment provides safe and efficient mechanisms for making and receiving payments with minimum risks to the CBN, payment service providers and end-users.
To make the e-payment vision a success, the CBN, in collaboration with key stakeholders in the payments community, developed the National Payments Systems Vision 2020 (NPSV 2020). The NPSV 2020 is a subset of the Financial Systems Strategy 2020 (FSS 2020).
