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Tag: Economic growth

  • Sustaining economic growth prospects with FX reforms

    Sustaining economic growth prospects with FX reforms

    Nigeria’s economy recorded its fastest growth in nearly a decade in the fourth quarter of 2024, driven largely by bold economic reforms—most notably in the foreign exchange regime. The World Bank has acknowledged that the country is making significant progress in restoring macroeconomic stability, while also reallocating more resources towards human capital development, social protection, and infrastructure. Economic analysts point to the Central Bank’s inflation-fighting measures and the enhanced transparency in the FX market as critical pillars for achieving enduring macroeconomic stability, writes Assistant Editor COLLINS NWEZE

    For the World Bank, exchange rate reforms were a key driver of Nigeria’s 4.6 per cent economic growth recorded in the fourth quarter of last year. Spearheaded by the Olayemi Cardoso-led Central Bank of Nigeria (CBN), these reforms unified all exchange rates under the Investors and Exporters (I&E) FX window.

    As a result, all foreign exchange applications—including those for medical expenses, school fees, Business Travel Allowance (BTA), Personal Travel Allowance (PTA), and Small and Medium Enterprises (SMEs)—are now processed through the I&E window. The CBN also reinstated the “Willing Buyer, Willing Seller” model within this framework, marking a significant shift in foreign exchange operations.

    While the reforms have yielded notable progress, the apex bank continues to reassure both domestic and international investors of its commitment to rebuilding Nigeria’s economic buffers and strengthening financial resilience. For instance, in a bold move to address soaring inflation, the CBN raised the Monetary Policy Rate by 875 basis points to 27.5 per cent in 2024—a crucial step toward curbing inflationary pressures and restoring macroeconomic stability.

    In addition, the foreign exchange market—once plagued by over $7 billion in unfulfilled obligations and a fragmented FX regime that encouraged arbitrage—has undergone significant restructuring. The CBN not only cleared the outstanding backlogs but also implemented transparent mechanisms to prevent future accumulation, reinforcing investor confidence and market discipline.

    At the unveiling of the Nigeria Development Update (NDU) titled “Building Momentum for Inclusive Growth, in Abuja, the World Bank’s lead economist for Nigeria, Alex Sienaert, disclosed that there was a 4.6 per cent year-on-year growth in the fourth quarter, including continued expansion in early 2025 based on high-frequency business indicators. The World Bank expects Nigeria’s economy to grow 3.6 per cent this year.

    Sienaert commended the Nigerian government for implementing macroeconomic reforms that have stabilized the economy.

    However, he pointed out that more efforts are needed to ensure that this growth is inclusive, particularly through expanding cash transfer programmes for the vulnerable populations in the country. Sienaert added that international experience shows that the public sector alone cannot generate sustainable economic growth and jobs. He stressed that public resources remain limited and that a successful strategy for Nigeria would involve positioning the public sector to both provide essential services—such as human capital development and infrastructure—and create an enabling environment for the private sector to thrive.

    “Nigeria is no exception, particularly since public resources remain constrained. A useful strategy is to position the public sector to play a dual role as a provider of essential public services, especially to build human capital and infrastructure, and as an enabler for the private sector to invest, innovate, and grow the economy,” Sienaert added.

    Nigeria’s foreign exchange reforms have created a market-reflective, unified and stable exchange rate, allowing the central bank to rebuild official reserves, now exceeding $37 billion, Sienaert said. “That’s significant because this is the cushion the economy has against external volatility,” he said. The World Bank also said Nigeria’s economy needs to grow at a rate five times faster than its current pace to achieve the $1 trillion target by 2030 as well as address the country’s rising poverty levels.

    On his part, Cardoso addressed the role of the Central Bank in safeguarding economic stability, particularly in the foreign exchange market. “We will continue to protect the economy. With that comes a need to be proactive,” he remarked. He expressed confidence that the ongoing policies will lead to a moderation of inflation and interest rates over time. He also stressed the importance of financial inclusion, noting that the CBN is committed to supporting the fintech sector and improving access to finance for all Nigerians.

    How it started

    On assuming office in October 2023, the CBN leadership prioritized reforms to rebuild Nigeria’s economic buffers and strengthen resilience. Inflation, which had surged to 27 per cent, was one of the most pressing challenges, partly driven by excessive money supply growth. While the GDP growth had stagnated at a meagre 1.8 per cent over the previous eight years, money supply expanded rapidly, averaging about 13 per cent growth annually. This imbalance not only fuelled inflation but also contributed to a significant depreciation of the naira.

    Besides, inflation creates uncertainty for households and businesses, acting as a silent tax by eroding purchasing power and driving up living costs. To tackle the pressing challenge of inflation, the CBN acted decisively by raising the Monetary Policy Rate by 875 basis points to 27.5 per cent in 2024—an essential move to contain inflation and restore stability.

    FX backlogs cleared

    In the foreign exchange market, the country faced a backlog of over $7 billion in unfulfilled commitments and a fragmented FX regime characterized by multiple forex rates, which had encouraged arbitrage opportunities. This regime stifled much needed foreign investment, and led to the depletion of our external reserves which fell to $33.22bn in December 2023.  It must also be understood that the cost of the FX subsidy regime is estimated to far exceed that of fuel subsidies.

    The apex bank has also undertaken critical reforms to unify Nigeria’s exchange rate, eliminating distortions and restoring transparency. This unification has enabled it to clear the outstanding foreign exchange obligations, giving businesses—ranging from manufacturers to airlines—the confidence to plan and invest in the future.

    To further enhance the functionality of the foreign exchange market, the CBN introduced an electronic FX matching system, which has proven effective in other markets. With these developments came positive Fitch Ratings on Nigeria economy, signalling positive fallout from the reforms.

    The global rating agency said that 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.

    Transparency/confidence building measures

    The apex bank 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. 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.”

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    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.

    Policies attract more dollar inflows

    As part of its efforts to boost diaspora remittances and support naira stability, the CBN recently announced the introduction of two new financial products designed to serve Nigerians living abroad. The Non-Resident Nigerian Ordinary Account and the Non-Resident Nigerian Investment Account was created to streamline remittances, encourage investments, and foster financial inclusion among Nigerians in the diaspora. It said, “The Central Bank of Nigeria is pleased to inform the general public of the introduction of the Non-Resident Nigerian Ordinary Account and Non-Resident Nigerian Investment Account targeted at Nigerians in diaspora.”

    The initiative is also expected to provide a secure and efficient platform for managing funds and investing in Nigeria’s financial markets. Since the beginning of this year, eligible NRNs have continued to get the opportunity to own any of the Non-resident Nigerian accounts. The Non-Resident Nigerian Ordinary Account was designed to facilitate remittances by allowing non-resident Nigerians to remit foreign earnings into Nigeria and manage funds in foreign currency or naira.

  • Boosting communities’ economic growth, job creation

    Boosting communities’ economic growth, job creation

    To position Nigeria as a leader in global economic development, a comprehensive plan is needed—one that focuses on strengthening local communities, creating sustainable jobs and building robust infrastructure. Central to this vision is the idea of community-led development initiatives that harness the power of local knowledge and resources. These initiatives must prioritise inclusive economic opportunities, social cohesion and long-term sustainability. DANIEL ESSIET reports on ongoing campaigns centred on empowering communities, investing in the workforce and creating jobs which will serve as the foundation for the country’s economic resurgence.

    The creation of quality jobs remains a major challenge in global economies. A persistent lack of decent work opportunities, coupled with insufficient investments, has contributed to the erosion of sustainable and inclusive economic growth, which, in turn, threatens to undermine progress, hinder job creation and stifle improvements in living standards. According to the United Nations, the situation places global communities under significant threat. The World Economic Situation and Prospects report for 2024 paints a sobering picture of the global economic landscape, highlighting multiple crises that continue to jeopardise progress toward the Sustainable Development Goals (SDGs). In Africa, Agenda 2063 serves as the Continent’s blueprint and master plan for transformation. This strategic framework seeks to turn Africa into a global powerhouse by fostering inclusive and sustainable development. It is a concrete manifestation of the pan-African drive for unity, self-determination, freedom, progress and collective prosperity—values rooted in Pan-Africanism and the African Renaissance.

    The genesis of Agenda 2063 emerged from a realisation among African leaders that the focus of the Organisation of African Unity (OAU) which later became the African Union (AU), had primarily been on the struggle against apartheid and the attainment of political independence.

    However, there was a growing consensus that Africa’s agenda needed to be redefined. The emphasis needed to shift from the past struggles to prioritising inclusive social and economic development, continental and regional integration, democratic governance and peace and security. These pillars aim at repositioning Africa as a dominant player on the global stage.

    As a testament to their commitment to this new path, African heads of state and government signed the 50th Anniversary Solemn Declaration during the Golden Jubilee celebrations marking the formation of the OAU/AU in May 2013. The declaration reaffirmed Africa’s dedication to achieving the Pan-African vision: an integrated, prosperous and peaceful Africa driven by its citizens and represented as a dynamic force in the international arena.

    Agenda 2063 is the concrete manifestation of this vision, outlining how the Continent intends to achieve it over a 50-year period, from 2013 to 2063.The importance of envisioning a long-term, 50-year development trajectory for Africa cannot be overstated. The Continent faces ongoing structural transformations, including a reduction in conflicts and renewed economic growth. Africa is also embracing people-centred development, gender equality and youth empowerment.

    Moreover, the rapidly changing global context, including increased globalisation and the ICT revolution, has positioned Africa for greater unity; making it a global force capable of rallying support around its common agenda.

    Emerging opportunities for development and investment abound, particularly in areas such as agribusiness, infrastructure development, health, education and the value addition of African commodities. These areas present significant prospects for furthering Africa’s economic transformation and securing a brighter future for its people.

    Agenda 2063, the African Union’s (AU) strategic framework for the Continent’s development, envisions a prosperous and integrated Africa, driven by sustainable growth and shared prosperity.

    Crucial activities outlined in the 10-year implementation plans will ensure that Agenda 2063 delivers quantitative and quality transformational outcomes for Africa’s people. One of the most crucial sectors in realising this vision is infrastructure, which plays a pivotal role in fostering economic growth, job creation and poverty reduction. The gap in infrastructure is a widely recognised issue across Africa. Poor infrastructure impacts every aspect of life, from the ability to trade goods and services to access basic services such as healthcare and education. African countries, especially those south of the Sahara, rank among the least competitive in the world.

    Infrastructure deficits are a key factor in holding back economic progress, with some studies estimating that Africa’s infrastructure challenges reduce its GDP growth by as much as two per cent annually. The lack of infrastructure in Africa is a continental problem that demands a continental solution. To address these challenges, coordinated efforts at all levels are necessary—continental, regional and national. This will ensure that infrastructure development projects benefit all African countries, regardless of their size or economic status. At the continental level, the African Union Commission (AUC) and the New Partnership for Africa’s Development (NPCA) are responsible for guiding the implementation of infrastructure projects.

    At the regional level, the Regional Economic Communities (RECs) play a vital role in coordinating projects within their respective areas, ensuring that these initiatives align with local priorities.

    National governments have the duty to ensure that infrastructure projects are constructed within their borders and benefit their populations. The PIDA (Programme for Infrastructure Development in Africa) is a flagship initiative that aims at accelerating the development of infrastructure across the continent. The responsibility for updating PIDA lies with the NPCA, which works closely with the RECs and their specialised institutions. Together, they ensure that the infrastructure master plans are responsive to Africa’s evolving needs, particularly in the context of Agenda 2063.

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    In the coming years, the success of infrastructure initiatives across Africa will depend on continued collaboration among governments, regional bodies, the private sector and international partners. Only through coordinated action can the Continent build the infrastructure necessary to achieve its ambitious development goals and secure a brighter future for its entire people.

    In Nigeria, the need for federal investment in both physical and human capital is immense. The country must invest trillions of dollars in infrastructure maintenance and expansion projects to bridge the widening gaps in its infrastructure.

    The Chief Executive of SMEFUNDS, Femi Oye called for a renewed focus on enhancing national resilience by expanding investments in clean energy technologies. He indicated that new physical infrastructure should be energy-efficient and existing infrastructure should be upgraded to improve energy efficiency where possible.

    One of the primary advantages of community-driven economic development, according to Oye, is its ability to generate new job opportunities, support entrepreneurship and foster innovation.

    The Director-General of the Development Agenda for Western Nigeria (DAWN) Commission, Oluseye Oyeleye emphasised that Community Economic Development (CED) is more than just economic growth-it’s about creating resilient, inclusive and equitable communities.

    “It’s not just about attracting external investments,” he explains, “it’s about nurturing local entrepreneurship, fostering innovation and ensuring that the benefits of development are shared by everyone.”

    This philosophy resonates with several of the UN’s SDGs, including the goal of reducing inequalities (SDG 10), promoting decent work and economic growth (SDG 8) and building sustainable cities and communities (SDG 11).

    In a world grappling with economic disparities and an urgent need for sustainable growth, CED has emerged as a beacon of hope. In the ancient town of Ara, a transformative partnership between the DAWN Commission and the Ara Global Development Foundation (AGDF) is demonstrating how local empowerment can drive profound and lasting change, aligning with the United Nations Sustainable Development Goals (SDGs).

    The ARA2035 Agenda, launched by the AGDF embodies this vision by focusing on community rejuvenation through a bottom-up approach that empowers residents to actively shape their future. A key initiative in this transformation is the COLDET project, spearheaded by the DAWN Commission, which signifies a crucial shift from traditional top-down development models to more sustainable, community-driven approaches.

    Segun Balogun, who leads the project, emphasised the importance of empowering local stakeholders to assess their community’s assets, prioritise needs and implement sustainable projects.

    The approach aligns with the UN’s focus on participatory governance and inclusive decision-making; ensuring that development initiatives respond to local needs and priorities.

    By employing an integrated framework that combines systems practice with other methodologies, COLDET equips communities with the tools to engage in self-assessment and development planning.

    At the heart of the CED approach is the identification and leveraging of a community’s existing assets.

    In Ara, these assets include physical infrastructure, natural resources, cultural heritage, human capital and social networks. By investing in these assets, the project aims at creating sustainable, locally-rooted economic opportunities.

    The collaboration between the DAWN Commission and the Ara Global Development Foundation is not just about transforming Ara, according to Oyeleye.   It’s about creating a model for community empowerment and sustainable development that can be replicated in other parts of the world.

    Through CED, Ara is becoming a shining example of how local solutions can drive global progress, one community at a time. He also stressed the importance of strong economic development in facilitating infrastructure improvements. As businesses invest in local communities, they not only contribute to the local economy but also generate funds for infrastructure projects. These projects may include the construction of roads, bridges, public transportation systems, parks, recreational facilities and utilities.

    Improved infrastructure not only enhances residents’ quality of life but also attracts more businesses, creating a virtuous cycle of prosperity that benefits all.

    The Chairman of AGDF Steering Committee, Dr Tunji Olugbodi highlighted the vast potential of rural tourism in Southwest Nigeria. With its diverse landscapes, rich cultural heritage and vibrant traditions, according to him, the region stands poised to become a key player in the global tourism industry.

    “Investing in the necessary infrastructure and promoting the region’s attractions will not only bolster domestic tourism but also draw international visitors, creating a sustainable economic impact,” Olugbodi said.

    He emphasised that initiatives such as eco-tourism, the preservation of historical sites and support for local crafts and cultural events are essential. These measures could lead to jobs creation in sectors such as hospitality, tourism and related industries, benefiting the local economy and fostering community development.

    The traditional ruler of Ara, Oba Olubayo Adesola Windapo,   emphasised that the Ara Project goes beyond tourism to prioritise social development.

    According to him, it ensures that local residents have access to public services, job opportunities and a voice in the decision-making processes that affect their communities.

    The traditional ruler   further emphasised the importance of community-based tourism as a driver of local economic growth. The community’s development plan focuses on promoting cultural initiatives that celebrate Ara’s unique heritage. This includes organising festivals, supporting local artisans and promoting businesses that reflect the region’s rich traditions.

    “By leveraging our cultural assets, we can attract visitors and increase revenue which will benefit the entire community,” Oba Windapo said.

  • Reconciling economic growth with environmental sustainability

    Reconciling economic growth with environmental sustainability

    • By Adésegun Olútáyo Osìbánjo

    Climate change is one of the defining challenges of the modern era, demanding urgent global action to mitigate its adverse effects on the environment, economies, and human lives. For Africa, however, the quest for climate action raises fundamental questions about how to balance environmental responsibilities with economic growth and energy access.

    The concept of climate action emerged alongside growing awareness of industrialization’s environmental toll. By the mid-20th century, scientists had begun documenting the impact of human activities on the climate, prompting international responses. Agreements like the Kyoto Protocol (1997) and the Paris Climate Agreement (2015) sought to address global warming by reducing greenhouse gas (GHG) emissions, promoting adaptation, and supporting sustainable development.

    While these frameworks marked significant milestones, they also exposed disparities between industrialized and developing nations. Wealthier nations, having benefited from decades of unrestricted industrialization, assumed leadership roles in crafting these agreements, often neglecting the realities faced by regions like Africa.

    Global demand for climate action has intensified, driven by mounting evidence of climate change’s impacts. Rising sea levels, extreme weather events, loss of biodiversity, and threats to food security have highlighted the urgency of coordinated efforts. However, this demand often assumes universal applicability, masking deep disparities in contributions to climate change and capacities for mitigation.

    Industrialized countries dominate global CO2 emissions, reflecting their extensive histories of fossil fuel consumption. In contrast, developing regions like Africa contribute only about 3% to global emissions, a fact that underscores the disproportionate pressures placed on the continent to adopt stringent environmental policies.

    Historical context reveals the unequal distribution of CO2 emissions across nations. Economies like the United States, China, and those in Europe have accounted for the majority of global emissions, driven by industrial activities and energy-intensive growth strategies. This legacy of emissions contrasts sharply with Africa’s minimal contribution, which results from limited industrialization and energy poverty.

    Despite contributing only a fraction to global emissions, African nations are often expected to implement ambitious climate strategies similar to those of industrialized countries. These expectations fail to account for Africa’s developmental challenges, including low economic growth, widespread poverty, and insufficient access to modern energy.

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    The emphasis on global climate action has resulted in undue pressure on Africa to conform to stringent environmental policies. Policies championed by developed nations, such as the Biden administration’s aggressive environmental agenda, frequently overlook Africa’s need for economic growth and energy infrastructure. This imbalance exacerbates challenges for the continent, which must navigate high energy poverty and limited financial resources while striving to meet global expectations.

    Economic growth vs. environmental stringency

    A contrasting approach emerged during the Trump administration, which prioritized economic growth and energy independence over strict environmental regulations. By withdrawing from the Paris Agreement, the administration signalled a commitment to balancing economic prosperity with environmental sustainability. US Secretary of Energy Chris Wright underscored the importance of fostering energy development as a driver of growth, a stance that aligns with Africa’s realities and aspirations.

    Africa and the African Union (AU) must seize this opportunity to assert energy sovereignty and prioritize economic development. By rejecting economically harmful climate policies, the continent can chart a course toward inclusive growth and sustainable progress.

    Sustainability factor for electricity provision

    Electricity provision in Africa must align with the sustainability factor, which emphasizes affordability and accessibility for consumers. Fossil fuels, particularly coal, offer cost-effective solutions for addressing energy poverty, provided their environmental impacts are managed through technologies like Clean Coal Technology (CCT).

    CCT, which significantly reduces CO2 emissions from coal-powered plants, demonstrates that fossil fuel-based energy can be harnessed responsibly. This approach enables African nations to close their energy gaps without compromising their developmental objectives.

    The concept of leapfrogging directly to renewable energy systems has gained traction as a proposed solution for Africa’s energy challenges. While appealing in theory, this approach overlooks critical practicalities. Renewable energy sources like solar, wind, and hydro are intermittent, reliant on weather conditions, and incapable of providing a 24/7 electricity supply.

    Transitioning away from fossil fuels entirely without alternative solutions risks deepening energy poverty and stalling economic progress. A diversified energy mix, incorporating both fossil fuels and renewables, offers a balanced strategy for meeting Africa’s energy demands while addressing environmental concerns.

    Role of Research and Development

    Research and Development (R&D) must anchor Africa’s climate action strategy, enabling the development of technologies that enhance energy efficiency and reduce environmental impacts. Clean Coal Technology, carbon capture innovations, and advancements in renewable energy storage exemplify the possibilities for achieving a sustainable energy portfolio.

    R&D also empowers Africa to craft home grown solutions tailored to its unique challenges. By investing in education, science, and technology, the continent can position itself as a global leader in sustainable energy innovation.

    Energy access is central to economic growth, industrialization, and societal development. Without reliable electricity, industries cannot thrive, healthcare systems cannot function effectively, and education remains stifled. The absence of energy infrastructure perpetuates brain drain (“Japa”), as skilled professionals seek better opportunities abroad.

    By addressing energy poverty through accessible and affordable solutions, Africa can reverse this trend (“Japada”), drawing its diaspora’s expertise and positioning itself as a hub for global innovation. Energy independence is not just a developmental necessity; it is a transformative pathway toward reclaiming Africa’s rightful place in the global economy.

    Sustainability in Africa requires a balanced approach that meets the needs of people, the planet, and economic progress. Instead of imposing one-size-fits-all policies, the global community must support Africa in designing energy systems aligned with its unique realities. Investments in R&D, diversified energy strategies, and innovative technologies ensure Africa achieves a just transition while safeguarding the environment and advancing its developmental priorities.

    Inspired by the timeless wisdom of 2AO’s Words on Marble: “Any developing nation that remains a signatory to the Paris Climate Agreement and prioritizes the implementation of stringent environmental policies over the fundamental needs of the people and the country’s economic growth is destined to wallow in abject poverty forever,” Nigeria can build on the fulcrum of this guiding principle to redefine Africa’s approach to climate action and foster inclusive development.

    •Engr. Osibánjo is convener of the Africa Woke Citizens Platform (AWCP). He writes via adeolu.osibanjo@outlook.com

  • Building strong, resilient financial system for economic growth

    Building strong, resilient financial system for economic growth

    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.

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    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).

  • Credit guarantee instruments: Path to financial inclusion and economic growth

    Credit guarantee instruments: Path to financial inclusion and economic growth

    • By Olasupo Olusi

    In Nigeria’s bustling markets and commercial districts, millions of business owners share a common struggle: accessing tailored financing needed to scale-up their operations. A furniture maker in Benin City, Edo State, requires capital to purchase modern equipment but lacks the type of collateral acceptable to financial institutions. In Aba, Abia State, a garment producer with booming demand struggles to expand her operations due to high-interest rates on loans. In Jos, Plateau State, a vegetable farmer needs credit to invest in irrigation systems to combat dry-season challenges but is unable to meet stringent lending requirements.

    Meanwhile, a promising tech start-up in Lagos seeks bridge funding to scale but has no credit history. These scenarios play out daily across the country where accessing finance remains one of the most significant barriers for businesses in Nigeria. Various reports from both local and international development agencies indicate that about 5-10% of Nigerians have access to adequate financing

    This challenge is not unique to Nigeria. Globally, the World Bank’s Global Findex Database (2021) shows that only 10% of adults in Africa reported borrowing from a formal financial institution, compared to 16% in East Asia and the Pacific, 8% in South Asia, and 60-80% in Western Europe and North America. The disparities are stark, underscoring the structural barriers that restrict credit flow in developing economies. 

    In Nigeria, a limited capacity to package projects, lack of collateral, inadequate credit history and general risk aversion by financial institutions are key factors constraining credit access. Given the private sector’s critical role in job creation and economic development, addressing this financing gap is essential. As Nigeria aims to achieve its goal of becoming a trillion-dollar economy under President Bola Ahmed Tinubu’s Renewed Hope agenda, closing the financing gap is critical – as they say, MSMEs are the engine of growth. Or for those who believe in the good book, “money answereth all”.  Credit Guarantee Instruments (CGIs) emerge as a transformative tool to unlock credit flow, deepen financial inclusion, and drive sustainable economic growth.

    Credit Guarantee Instruments (CGIs) are mechanisms designed to reduce the risks financial institutions face when lending to businesses. A third party, such as a government agency or a specialized institution, guarantees a portion of the loan, ensuring that lenders recover part of their losses if borrowers’ default. By reducing the perceived risk, CGIs incentivize lenders to extend credit to underserved sectors, including micro, small, and medium enterprises (MSMEs).

    Globally, CGIs have proven effective in closing financing gaps. Recognizing their importance, the Central Bank of Nigeria (CBN) introduced guidelines in 2022 for regulating and supervising Credit Guarantee Companies (CGCs). These guidelines aim to ensure transparency and accountability, setting the foundation for a robust credit guarantee ecosystem in Nigeria.

    Read Also: NELFUND’s loans hit N116.184bn

    Nigeria has experimented with credit guarantee initiatives such as the Agricultural Credit Guarantee Scheme Fund (ACGSF) and the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL). While these programs showed promise, they fell short of achieving their full potential due to design flaws and implementation challenges. To avoid repeating these mistakes, Nigeria must adopt a tailored approach that incorporates global best practices while addressing local needs.

    A well-designed credit guarantee scheme could significantly transform Nigeria’s financial landscape by reducing lender risk and unlocking access to affordable financing for enterprises. This would encourage risk-based lending to businesses and to scale-up, boosting overall productivity and contributing to GDP growth, while also fostering job creation to lower unemployment. Furthermore, with improved access to capital, businesses could increase their investments in technology and innovation, enhancing their competitiveness in global markets. For instance, tech start-ups and agricultural enterprises could leverage financing to adopt advanced tools, expanding their market reach and operational efficiency.

    A Credit Guarantee Instrument could also significantly advance financial inclusion and encourage formalization. Many Nigerian business owners currently rely on informal financing or personal savings, leaving them vulnerable to economic shocks. A formalized credit guarantee scheme would create a more inclusive financial ecosystem, ensuring that businesses of all sizes can access the funding they need to grow.

    As Nigeria seeks to diversify its economy away from fossil fuel dependence, CGIs can channel resources into non-oil sectors such as agriculture, manufacturing, technology, and services. These sectors have immense potential to drive economic diversification, create employment opportunities, and reduce poverty. The knock-on effects of such growth—job creation, income generation, and poverty alleviation—could be transformative for the Nigerian economy.

    While development finance institutions (DFIs) such as the Bank of Industry and the Development Bank of Nigeria have made strides in supporting businesses, their reach remains limited by the need to optimize risk management. A CGI could complement these efforts by mobilizing private sector participation in commercial lending. Partnering with banks and financial institutions, the instrument could facilitate innovative lending products at lower interest rates and with reduced collateral requirements. This would expand the credit pool and encourage long-term investments in economic growth.

     As part of its recognition of the critical nature of CGIs in fulfilling its mandate, the Bank of Industry in December 2024 signed a $50 million dollars Loan Portfolio Guarantee Agreement with the African Guarantee Fund (AGF) to provide funding for MSMEs and women owned businesses in line with BOI’s six thematic areas.

    Building a path forward

    To implement an effective CGI program, a coordinated public-private partnership is essential. The following steps should guide the design and implementation:

    • Tailored Design: The CGI program must address the specific needs of all Nigerian businesses. This includes limited collateral and high-interest rates while ensuring accessibility for MSMES. It must be designed to maximize accessibility for businesses without compromising lending standards.

    • Effective Risk Management: A robust risk management framework is critical. This includes thorough credit assessments, continuous monitoring of loans, and prioritizing borrowers with viable business models.

    • Stakeholder Collaboration: Success depends on collaboration among the government, financial institutions, and development partners. Banks must be incentivized to participate, while development partners can provide technical expertise and funding support.

    • Transparency and Accountability: Clear guidelines, accountability measures, and robust oversight mechanisms are vital to prevent misuse and build trust among financial institutions and beneficiaries.

    • Awareness and Capacity Building: Businesses must be informed about the scheme and supported in meeting credit requirements. Capacity-building initiatives, such as training programs on financial management and business planning, can empower entrepreneurs to leverage credit guarantees effectively.

    As Nigeria works toward becoming a trillion-dollar economy, establishing a National Credit Guarantee Company (CGC) is a strategic imperative. By reducing credit risks for financial institutions, such an initiative would make financing more accessible and inclusive for businesses across all sectors. This, in turn, would empower Nigerian entrepreneurs, accelerate economic diversification, and foster sustainable growth.

    Stakeholders, including the government, banks, DFIs, and development partners—must collaborate to bring this vision to life. A well-designed CGI program could unlock the full potential of Nigeria’s enterprises, laying the foundation for a resilient and inclusive economy. The time to act is now. It is refreshing to see that the President Bola Ahmed Tinubu-led government is making CGIs more accessible to Nigerian enterprises in line with the pledge in his 2025 new year speech to kick off the National Credit Guarantee Company (NCGC) before the end of second quarter.

    •Dr Olusi is Managing Director, CEO, Bank of Industry.

  • Nigeria needs $20bn annually for economic growth – Edun

    Nigeria needs $20bn annually for economic growth – Edun

    The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, has disclosed that Nigeria needs to invest $20 billion annually to achieve its economic targets by 2027.

    He made this statement on Friday during the Citizens and Stakeholders Engagement on the Implementation of Presidential Priorities and Ministerial Deliverables for the Fourth Quarter of 2024, held in Abuja.

    Edun noted the urgency of the investment, stressing its role in driving economic growth and facilitating infrastructural development. According to him, an additional $20 billion per year is required to grow the economy by an average of 6.3 percent in the medium term.

    “We need significantly more growth,” Edun stated. “An additional $20 billion is the target we need for social infrastructure to facilitate logistics for agriculture.”

    Read Also: VAT remains 7.5% – Wale Edun

    The minister pointed out that the government would rely primarily on increased revenue to meet this ambitious target. He stressed the need for a robust tax revenue framework to secure the necessary funding, underscoring that sustainable economic growth hinges on this strategy.

    “To achieve this target and grow the economy, the government can only secure the funds from revenue. Tax revenue needs to be increased to reach the desired levels,” he explained.

    Edun also linked fiscal discipline and exchange rate stability to Nigeria’s ability to attract foreign investment. He noted that controlling the fiscal deficit and ensuring a stable exchange rate would boost investor confidence, leading to more business activity in the country and increased tax revenue from those investments.

    “Once the deficit and exchange rate are under control, it will encourage investors to come and do business in Nigeria. In turn, they will pay their taxes,” Edun said.

    Details shortly…

  • We are committed to driving economic growth, enhancing national security, others, says Abbas

    We are committed to driving economic growth, enhancing national security, others, says Abbas

    Speaker of the House of Representatives, Abbas Tajudeen says  the major focus of the 10th Assembly is to help drive the nation’s economic growth, enhance national security and improve access to healthcare.

     The Speaker who spoke yesterday at a retreat for members of the House of Representatives Press Corps organised under the Parliamentary Development Programme, said the House is also committed to reforming the education sector and advancing good governance.

     He said in line with this, the House has passed about 89 bills since its inauguration, which has helped to drive the activities of the country and the Nigerian people.

     He commended the unwavering dedication, professionalism, and commitment of the media to bridging the gap between lawmakers and the citizens.

     He said “through your diligent reporting, millions of Nigerians gain insights into our legislative processes, decisions, and their impact on daily lives. This partnership between the legislature and the media is essential for achieving our core priorities of fostering robust citizen’s engagement.

    “Your work informs and empowers citizens to actively participate in governance and hold leaders accountable.

     “The Inter-Parliamentary Union (IPU) has consistently highlighted the pivotal role of the media in strengthening parliamentary democracy by promoting transparency and accountability. This underscores the importance of your role as a bridge between the legislature and the public.”

     The Speaker further said that the 10th House’s legislative agenda is a comprehensive and ambitious blueprint designed to address the critical challenges facing the nation, saying “our focus is on driving economic growth, enhancing national security, improving healthcare access, reforming education, and advancing good governance.

     “Each bill introduced is carefully developed to ensure it delivers tangible benefits to Nigerians and aligns with our national development goals.

     “I am pleased to highlight our significant strides in the past seventeen months. Our One-Year Performance Assessment Scorecard reveals remarkable achievements, including passing 89 bills across our priority areas.

     “These include the Electric Power Sector Reform (Amendment) Bill, 2023; the Federal Audit Service Bill, 2023; the Control of Small Arms and Light Weapons Bill, 2023; the Armed Forces Act (Amendment) Bill, 2023 and the National Assembly Library Trust Fund Act (Amendment) Bill, 2024.

     It also includes “the Student Loans (Access to Higher Education) Act, 2024; the Cybercrime (Prohibition, Prevention, Etc.) Act (Amendment) Bill, 2024; the National Anthem Bill, 2024; and the Traditional Complementary and Alternative Medicine Council of Nigeria (Establishment) Bill, 2023.

     “These laws address critical aspects of governance, security, and economic reform.

    Read Also: Govt needs to review 115 opaque laws to stimulate economic growth, says NESG

     “Beyond legislation, the House has undertaken various initiatives to deepen public engagement and enhance the legislative process.

     “These include the National Dialogue on State Policing, the National Discourse on Nigerian Security Challenges, a retreat on the effective implementation of the Petroleum Industry Act, tax reform modernisation dialogues, the Citizens’ Town Hall on the 2024 Appropriation Bill, and the pre-legislative presentation of tax reform bills.

     “These engagements underscore our commitment to ensuring that governance is inclusive, participatory, and responsive to the needs of all Nigerians.”

  • Fed govt to inaugurate new national addressing council for economic growth

    Fed govt to inaugurate new national addressing council for economic growth

    The federal government has announced plans to inaugurate a new National Addressing Council (NAC) and a technical committee next year. 

    This is aimed at driving Nigeria’s agenda on planning, economic growth, and financial inclusion through an effective national addressing system.

    The national addressing system is a framework designed to establish a reliable and consistent method of assigning a geographic and numeric address to all buildings within an area. 

    The decision was taken on Wednesday during a pre-meeting of the council chaired by Vice President Kashim Shettima at the Presidential Villa.

    According to a statement issued on Thursday by Senior Special Assistant to the President on Media and Communications, Office of the Vice President, Stanley Nkwocha, this is part of the critical steps to reinvigorate the NAC in a bid to address challenges associated with the addressing system in Nigeria.

    Underscoring the need for the immediate standardisation of Nigeria’s addressing system, the Vice President described the move as essential for improving service delivery, enhancing urban planning, and driving economic growth. 

    Addressing stakeholders at the meeting, the VP noted that standardising Nigeria’s addressing system is long overdue, adding that it will end decades of infrastructural deficits and create a systematic approach to national address mapping.

    He said, “We cannot solve the challenges of urban planning, service delivery, or even basic navigation unless we establish a system that creates order. A robust addressing system is not just about convenience; it is about national development, security, and socio-economic progress.”

    The Vice President decried the consequences of the current disorganised system, noting its impact on governance, logistics, and the financial inclusion of many Nigerians. 

    “We live in cities where most houses are either haphazardly numbered or not numbered at all. This does more than complicate address mapping—it undermines trust in address verification, slows emergency responses, and excludes millions from financial services,” he explained.

    VP Shettima praised the foundational work done seven years ago when the National Addressing System initiative was introduced, noting, however, that there is a need to move beyond frameworks to actionable implementation. 

    Read Also: Presidency: Tax reform bills not anti-north, aimed at economic growth

    He continued: “This was not a vision to be left in dusty drawers or delayed indefinitely. Addressing is fundamental to our aspirations of becoming a 21st-century economy.

    “A standardised addressing system will enhance logistics, strengthen e-commerce, and foster trust in financial services. It will also enable accurate emergency response and disaster management, ensuring that no Nigerian is left behind.

    “The challenge before us is not about delegating responsibilities but about creating a synergy that cuts across federal, state, and local governments. Political will and technical expertise must work hand in hand to make this initiative a success”. 

    The Vice President further explained that the meeting marked the beginning of a transformative journey towards a Nigeria defined by order, trust, and opportunity.

    “We are not just solving logistical challenges; we are laying the foundation for a more organised, secure, and prosperous Nigeria. This is our collective responsibility, and we must see it through,” he added.

    The VP’s charge at the meeting was followed by two presentations from the National Identity Management Commission (NIMC) and the Nigerian Postal Service (NIPOST).

    Earlier in his remarks, the Deputy Chief of Staff to the President (Office of the Vice President), Senator Ibrahim Hassan Hadejia, said the focus of the meeting was to galvanize the federal government’s renewed efforts in driving economic and financial inclusion, among other targets. 

    He said leveraging opportunities in the National Addressing System would fast track government’s vision of attaining inclusivity and economic prosperity, especially for Nigerians in the rural areas. 

    The presentation by the National Identity Management Commission focused on enhancing the nation’s address verification system and building a critical infrastructure for the national addressing database project.

    The overview of the National Addressing System by NIPOST highlighted the work done by the current management, emphasizing the need for harmonizing the address database in Nigeria.

    The NIPOST presentation focused more on harmonizing the postcode with the national addressing system, deploying the latest technology, particularly geo-locating the physical addresses of Nigerians captured in the project. 

    Present at the meeting were the Minister of State for Housing and Urban Development, Hon. Yusuf Abdullahi Ata; the Director General of NIMC, Engr. Abisoye Coker-Odusote; Post Master General of the Federation/CEO, Engr. Omotola Odeyemi; representatives of Moniepoint, Konga and other stakeholders in the fintech, e-commerce and identity management sector.

  • FG asks councils to drive economic growth 

    FG asks councils to drive economic growth 

    The Federal Government has urged Local Government Councils (LGCs) across Nigeria to serve as catalysts for opportunities and progress within their communities. 

    Minister of Budget and Economic Planning, Senator Abubakar Atiku Bagudu, made the call during a courtesy visit by the Association of Local Governments of Nigeria (ALGON) at his office in Abuja.

    Bagudu noted that local governments have the potential to spur development by leveraging the recent Supreme Court judgment that grants financial autonomy to LGCs. 

    The Minister urged councils to harness this autonomy to focus on their unique areas of comparative advantage, which would improve governance and stimulate local economic activity.

    “We have 8,809 wards across the country,” Bagudu said. “We are prepared to support them in their unique roles to enable growth, much like the rapid development witnessed in places like China. We can achieve even better outcomes, as God has blessed our nation abundantly,” he said. 

    Read Also: U.S. to support Nigeria’s economic growth 

    Engr. Bello Lawal, President of ALGON, expressed ALGON’s intent to strengthen ties with the Ministry, stressing the role of local governments in implementing national initiatives at the grassroots level. 

    Lawal welcomed the Supreme Court’s ruling on local government autonomy, describing it as a turning point for councils that have struggled under limited financial control.

    “A new chapter is set to begin for local governments that have been in a state of near-inactivity. As the foundational level of governance, we are committed to executing federal initiatives that directly impact communities. However, funding and support from the Federal Government are essential for us to fully realise our mandate,” Lawal stated.

    Lawal also appealed to the Federal Government for assistance in capacity building, healthcare programmes, educational support, and other essential services to ensure that citizens at the grassroots level benefit from democratic dividends through efficient local governance.

  • Manufacturers, experts chart path for economic growth

    Manufacturers, experts chart path for economic growth

    For manufacturers, an intentional policy response by government, working with critical stakeholders, to tackle the myriads of challenges hurting the manufacturing sector’s growth and competitiveness has never been this imperative. With the sector currently on the downward trend, unable to propel job creation, economic growth and development, the need to deliberately and urgently address it’s litany of woes has taken centre stage. Accordingly, experts and operators seized the platform of this year’s Annual General Meeting of the Manufacturers Association of Nigeria to chart the way forward for the beleaguered sector. Assistant Editor CHIKODI OKEREOCHA reports.

    As President/CEO of the Africa Finance Corporation (AFC), a pan-African institution that catalysis private sector-led infrastructure investment across the continent, Mr. Samaila Zubairu, is evidently in a vantage position to know what holds the Nigerian manufacturing sector down from becoming productive and globally competitive; he also knows what must be done to turn the sector’s fortunes around.

    So, when Zubairu, last week, reeled out depressing statistics indicating the manufacturing sector’s less than sterling performance, including Nigeria’s poor showing in continental and global trade, and also proffered ways to change the narrative, the AFC boss rekindled the optimism of his audience that Nigeria will be, in his words “Successful in overcoming the challenges.”

    The occasion was the fourth Adeola Odutola Lecture/Presidential Luncheon organised by the Manufacturers Association of Nigeria (MAN) with the theme, “The Imperatives of an Intentional Development of the Nigerian Manufacturing Sector,” where Zubairu, as Guest Speaker, said, for instance, that the share of manufacturing in Nigeria’s Gross Domestic Product (GDP) of $477 billion as at 2023 is 12 per cent, compared to Germany or South Korea’s 30-40 per cent.

    Describing the manufacturing sector’s contribution to Nigeria’s GDP as “very meager,” Zubairu, whose presentation was delivered on his behalf by an Executive Director at AFC, Shameh Shamonda, said manufacturing, which grew a bit in 2021, is now flat, even as Foreign Direct Investment (FDI) into the manufacturing sector is also significantly lower than it was before. He attributed the downward slide to the current high exchange rate and interest rate.

    The Lecture, which was held last week Thursday, at Lagos Oriental Hotel, was the third and final leg of 3-day activities marking the 52nd Annual General Meeting (AGM) of MAN, with Zubairu, who has been in charge at the AFC for the past six years, also lamenting Nigeria’s trade statistics. “Another shocking statistics is that 15 per cent of total trade in the continent is intra-African, 85 per cent of the trade is always with the outside the world,” he revealed.

    “We cannot even trade among ourselves,” the AFC boss regretted, insisting, therefore, that “The African Continental Free Trade Area (AfCFTA) agreement has to be developed and prioritised because you have so many countries next door, but you (Nigeria) still decide to import from Europe, from the U.S or export. It doesn’t make sense. Something has to change.”

    Some of the things that must change if Nigeria must birth a thriving manufacturing sector, according to Zubairu, include investments in core infrastructure sectors of power, natural resources, heavy industry, transportation, and telecommunications; prioritisation of value addition to exportable raw materials, and leveraging mining and other non-oil sectors to diversify the economy away from its over-reliance on oil.

    Read Also; Again, the Rivers war!

    He listed others to include influencing the government to emplace a regime of clarity on its policies, finding ways to reduce cost of borrowing, finding the right projects that are priority for the country and its people. He also stressed the need to halt gas flaring and the captured gas harnessed to provide electricity. “All the gas that is being flared has to be captured,” Zubairu said

    For a start, the AFC chief did not mince words when he said “You cannot have industry without infrastructure that supports it,” He said it was in recognition of the role of supportive infrastructure in galvanizing industrialisation that the AFC was formed as a full-fledged financial institution separate from the government that works on bridging the infrastructure gap across the continent.  

    According to Zubairu, former Nigeria’s President Olusegun Obasanjo had, 17 years ago, looked at the state of Africa with a few other Heads of State and said there is a huge gap in infrastructure in Africa. “We cannot grow as a continent and we cannot compete with the world if we don’t bridge the infrastructure gap,” he quoted Obasanjo as saying.

    In line with the AFC’s mandate of directing investments into transformative infrastructure, Zubairu said the Corporation, which was created 17 years ago from capital mostly from the Central Bank of Nigeria (CBN), has invested $13.5 billion across different sectors in infrastructure in Africa, with a lot of the investments in Nigeria.

    While noting that the AFC is the second highest rated financial institution in Africa by global rating agency Moody’s, he said the Corporation has invested in 36 out of the 54 African countries. “We have covered around 80 per cent of Africa in terms of our investment so far,” Zubairu revealed, noting, however, that “The weight of our investment in Nigeria is higher than any other country, at 24 per cent last year.”

    He reiterated that “Nigeria is our host country and the largest shareholder of our institution is the Central Bank of Nigeria (CBN). WE have a well-diversified portfolio in Nigeria than the rest of the continent. We are a pan-African institution, but we are hosted here in Nigeria so, we do more in Nigeria than any other country.” 

    Prioritise value addition

    Speaking to the imperatives of an intentional development of the manufacturing sector, Zubairu said the issue of beneficiation, sometimes used interchangeably with value addition is “Very dear to my heart and it is linked to what you (manufacturers) are doing.”

    He said the practice of exporting abundant raw materials in Nigeria and other African countries without adding value to them must give way for some form of beneficiation, i.e. transformation of the raw materials to higher value products for local consumption or export.

    “Africa is endowed with a lot of resources, what we are doing wrong is that we are exporting the raw materials,” the AFC CEO said, citing electric vehicle as an example of how Nigeria and other African countries fritter away their resources. According to him, two per cent of the electric vehicle seen on the street comes from Africa because the continent has 30-40 per cent of the lithium and all the ingredients that go into the battery.

    The problem, he said, is that these raw materials (lithium for making battery) are exported all the way to China, which controls 80 per cent of the electric vehicles manufacturing capacity in the world. His words: “The Chinese produce the electric car and sell it back to Europe and the U.S. From the mine until you build a car, there are six steps. The first step which is mining is 2-3 per cent, which is what you see in the car as the African contribution.

    “Steps 2 and 3, which is the refining of the product, and another step, you capture 40 per cent of the value of the product. When you start with the first two steps, you capture 40 per cent instead of two or three per cent. What is happening now is effectively you get the products out, you export all the way to China and they send them back and they capture all the value. This applies to every single thing we have in Africa.”

    ‘Pursue diversification with vigour’

    Zubairu also said economic diversification has never been more compelling. According to him, it is one sure way to drive Nigeria’s GDP growth, which is at present, very heavily reliant on oil. He said as much as 90 per cent of Nigeria’s export is oil, and the challenge is, therefore, how do diversify that to other sources or sectors.

    “Everyone is focused on oil, but Nigeria has one of the largest and best quality lithium deposits in Africa, for instance, but no one is looking at mining because oil is sucking up all the energy and all of the investments. So, we are trying to diversify the economy and we are working with the Solid Minerals Development Fund (SMDF) to work with local developers on developing their mining concessions,” he said.

    The SMDF is a sovereign Fund established by the Federal Government to drive and catalyse private sector-led investments in Nigeria’s mining sector. Its objectives are to actively pursue investments that will de-risk the mining sector, to be the partner of choice for opportunities, and to empower the economic development and diversification of the Nigerian economy through the mining sector.

    The AFC has been in a transformative partnership with the SMDF to derisk Nigeria’s mining sector and scale up artisanal miners in the country to an industrial level of operation. The strategic collaboration also seeks to address the dearth of expertise and funding for early-stage mining projects, paving the way for these projects to reach financial close and full-scale operations.

    Zubairu gave more details: “We are working with the SMDF to work with local developers on developing their mining concessions. Some of them have the money to develop but haven’t developed before. Some of them don’t have the legal knowhow to negotiate with concessionaires.

    Some of them have the technical capabilities but don’t have the funding. “So, we play that role of plugging all these gaps and working in partnership with the developers of these mines and the SMDF, and we are happy to take early stage risk and spend early stage money to get the projects to bankability.”

    Halt gas flaring also

    The AFC boss also said Nigeria, an oil producing nation, must work on her lack of clarity of policy procedures particularly with regard to ensuring that all the gas that is being flared is captured and put to other uses.

    Zubairu is right. Between 2020 and 2024 alone, gas valued at $1.9 billion was flared in Nigeria, according to a report by the Nigerian Gas Flare Tracker. The report stated that during this period, 595.1 million standard cubic feet of gas were flared in nine states of Rivers, Delta, Imo, Edo, Akwa Ibom, Bayelsa, Anambra, Abia and Lagos.

    Indeed, gas flaring remains a sore point in Nigeria, with the country ranked top 10 gas-flaring countries in the world, with 7.4 billion cubic feet in 2018. The report said the total gas flared in Nigeria accounted for 6.9 per cent of the top 10 gas glaring countries in 2018.

    Sadly, gas flaring continues, despite persistent cries of gas scarcity by electricity-generating companies (GenCos). The report noted that the power generation potential of the gas flared was 59.5GWh. Currently, gas-fired power plants in the country are operating far below capacity due to gas shortages.

    MAN President Otunba Francis Meshioye, earlier in his welcome address, set the tone for what turned out to be a robust conversation on how to find solutions to problems inhibiting the manufacturing sector’s growth.

    He said it was concerning that the manufacturing sector continues to navigate uncharted waters caused by irrefutable domestic economic challenges emanating from unbearably high inflationary pressures, currency fluctuations, skyrocketing energy and input prices.

    Meshioye listed other challenges to include forex scarcity, infrastructural deficiency, low patronage, stiff regulatory hurdles, multiple taxes, negative perception of made-in-Nigeria products, categorization of industrial has users as commercial sector and inadequate supply of gas to manufacturing facilities, among others.

    The MAN President explained that the theme, ‘The Imperatives of an Intentional Development of the Nigerian Manufacturing Sector,’ was carefully thought out and crafted to reflect the manufacturing sector’s ongoing struggles and challenges, including rising costs that have affected profitability and the survival of many manufacturing firms.

    According to him, the challenges made it imperative for MAN “To advocate for a deliberate and concerted approach toward the development of the sector,” He emphsised that “By developing our manufacturing capabilities and leveraging its potential, we can reduce inflation and our dependence on imports, promote substitution, and create more jobs.”

    He also said the sector, if developed, will boost government revenue, strengthen and improve the forex market. “Our businesses have been heavily impacted by the macroeconomic and policy environment in which we operate,” Meshioye said.

    As he added, “We need to urgently address the binding constraints that make our local products uncompetitive; otherwise, the economy may continue on a downward trend with no certainty of when it will rebound.”

    MAN Director General Segun Ajaiyi-Kadir summed up what appears to be the central message at this year’s engagement, and the consensus of various stakeholders, saying, “Manufacturing is a strategic choice for a progressive country.

    “You manufacture to prosper or fail to do so and reap joblessness and poverty, decreased fiscal income, vulnerability to global market shocks, reduced GDP growth and balance of trade deficit. That’s the choice Nigeria has to make.