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Tag: Olayemi Cardoso

  • Assessing financial sector’s input to $1 trillion economy target

    Assessing financial sector’s input to $1 trillion economy target

    The World Bank recently reaffirmed Nigeria’s position as the largest economy in Africa by Gross Domestic Product (GDP). Not content with this achievement, the Federal Government has set an ambitious target of growing the economy to $1 trillion by 2030. While many stakeholders view this goal as audacious, they agree it is achievable. To realise this vision, substantial efforts will be required, including the Central Bank of Nigeria (CBN)-led bank recapitalisation, foreign exchange reforms, and a continued fight against inflation, writes Assistant Editor Collins Nweze

    A well-capitalised banking sector is undeniably crucial for the growth of the domestic economy. This is why nearly two years ago, Central Bank of Nigeria (CBN) Governor Olayemi Cardoso urged banks to prepare for a new round of recapitalisation to ensure they have the necessary capital to support the Federal Government’s $1 trillion GDP  target. Cardoso reiterated that President Bola Ahmed Tinubu’s economic plan aims to reach a $1 trillion GDP by 2030, emphasising that the current bank capitalisation is insufficient to support such a large economic scale.

    The CBN boss asked: “Will Nigerian banks have sufficient capital relative to the financial system’s needs in servicing a $1.0 trillion economy in the near future? In my opinion, the answer is “No!” unless we take action. Therefore, we must make difficult decisions regarding capital adequacy. As a first step, we will be directing banks to increase their capital.”

    Continuing, he said: “The administration, as outlined in the widely circulated Policy Advisory Council report on the national economy, had set an ambitious goal of achieving a Gross Domestic Product (GDP) of $1.0 trillion, with clearly defined priority areas and strategies.” According to him, attaining this substantial target necessitates sustainable and inclusive economic growth at a significantly higher pace than current levels. “The administration has already commenced this journey through fiscal reforms, including the removal of petrol subsidy and the unification of the foreign exchange market rate,” he added.

    Today, many banks have successfully recapitalised, while others are exploring mergers and acquisitions to strengthen their capital bases. The CBN Governor stated that these moves align with the central bank’s efforts to enhance financial inclusion and support economic growth. To further these objectives, the CBN has 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 World Bank recently identified four key sectors where strategic reforms could drive significant investment and job creation. In the Information and Communication Technology (ICT) sector, reforms could unlock up to $4 billion in investments, creating over 200,000 jobs. In agribusiness, potential investments of $6 billion could generate more than 275,000 jobs. The solar photovoltaic (PV) industry presents an opportunity for $8.5 billion in investments, potentially creating over 129,000 jobs. Meanwhile, the pharmaceutical sector could attract $1.6 billion in investments, leading to the creation of 30,000 to 40,000 jobs.

    Sustaining bank recapitalisation

    On March, 28, last year, CBN unveiled 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. “By enabling banks to extend more credit to MSMEs, we enhance job creation and productivity. 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.

    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. About one year 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.

    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. Afrinvest banking sector report on bank’s recapitalisation explained that the CBN had, in its March 2024 capital requirement guideline, announced a new capital structure for banks under different licenses to strengthen the financial system and aid the government’s target of a $1 trillion economy by 2032.

    Read Also: Hon. Alabi’s bill to protect domestic workers in Nigeria passes second reading

    The recapitalisation exercise was also triggered by the clear erosion of banks’ capital buffer post-2010 from a real and FX perspective compared to 2010 levels. “Using the 2023 average, the existing minimum capital size has lost 77.1 per cent and 76.5 per cent in FX and real terms, respectively. To shore up the capital gap, the CBN considered the impact of macroeconomic headwinds on banks’ risk profiles and financial position in defining the new threshold,” the report said.

    Stakeholders speak

    The Chairman of Parthian Group, Adedotun Sulaiman, emphasised the essential role of investments in economic development, stating, “capital is the oxygen of the economy, and without capital, we can’t go very far.” Speaking during the launch of the company’s two investment funds in Lagos, he said the products are its own modest contribution, in mobilising the capital needed to achieve the President’s audacious goal of creating a $1 trillion economy. He said: “I will say we have huge capital deficit in Nigeria, and other developing countries. We need enough capital to build infrastructure, and support economic growth. So, what we are doing is set up these products, mobilise the capital from small savers, individuals, and corporate and then deploy the capital to people that need it can use the funds to build roads, schools, healthcare among others,” he said.

    Sulaiman added: “So, that is what we are doing; it is our modest contribution to grow the Nigerian economy. The $1 trillion economy target is ambitious, audacious. The thing about life is that one should challenge oneself. Is it possible? Yes, it is possible but requires a lot of hard work and resources. And can we rise to the occasion as a country? Yes, I think so.”

    Other analysts said the government’s goal of achieving a $1 economy would require the institutionalisation of corporate governance in Nigeria’s public sector to foster transformation within the sector. They urged Nigeria to adopt good governance practices to align better with international business standards. She also called for a legal framework to support this institutionalization and structures to drive national transformation.

    Remittances deepen FX inflows

    Already, remittances through International Money Transfer Operators (IMTOs) rose 79.4 per cent to US$4.18 billion in the first three quarters of 2024, demonstrating the positive impact of FX reforms. Additionally, the CBN lifted the 2015 restriction barring 41 items from accessing FX at the official market to enhance trade and investment. 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 reaffirmed.

    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. Analysts insist that these measures under Cardoso have not only lifted the forex market and entrenched long-lasting stability but laid foundation for sustainable economic growth.

    Very significantly, the resilience of the domestic economy, bolstered by a strong financial system with robust soundness indicators, instils confidence in the economic structure. Major prudential ratios, such as capital adequacy, liquidity, and Non-Performing Loans ratios, were within prudential limits, reflecting proactive regulatory oversight and strong industry risk management practices. Significant credit was extended to growth-enhancing sectors such as agriculture, manufacturing and general commerce, as well as individuals and households.

    The credit played a crucial role in stimulating economic activities and supporting output performance, emphasising the role of financial institutions and sound regulation led by the Central Bank of Nigeria. Besides, the CBN has also taken strategic steps to tackle inflation. The apex bank 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.” 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. The CBN is continuing its disciplined approach to monetary policy, aimed at curbing inflation and stabilizing the economy. “These actions have yielded measurable progress: relative stability in the FX market, narrowing exchange rate disparities, and a rise in external reserves to over $40 billion as of December 2024.

    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,” he said. To further enhance the functionality of the foreign exchange market, the apex bank introduced an Electronic Foreign Exchange Matching System which has proven effective in other markets. The programme 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. For many stakeholders, these measures under Cardoso have not only lifted the forex market and entrenched long-lasting stability but laid solid foundation for economy and businesses to thrive.

    Banking sector indicators show resilience

    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.

  • Foreign reserves hit $40b as CBN strengthens forex market

    Foreign reserves hit $40b as CBN strengthens forex market

    Nigeria’s foreign reserves surpassed the $40 billion mark for the first time in three years, marking a significant milestone in economic recovery efforts.

    Central Bank Governor Olayemi Cardoso attributed the rise to key reforms.

    He spoke during a meeting with the Assistant Governor for Monetary Affairs at the Saudi Arabian Central Bank (SAMA), Talal Al-Humond, on the sidelines of the inaugural Conference on Emerging Market Economies in Riyadh.

    A statement by CBN said the reserves were at their highest in nearly three years.

    The reforms include the adoption of an electronic matching system to enhance transparency in the foreign exchange market and the introduction of a foreign exchange code of ethics.

    The code, which all Nigerian banks have signed onto, ensures strict adherence to market rules, fostering confidence among investors and market participants.

    At the conference organised by the Saudi Ministry of Finance and the International Monetary Fund (IMF) Regional Office, Cardoso advocated for stronger economic ties between Nigeria and the Middle East.

    He noted that Nigeria could learn valuable lessons from Saudi Arabia’s approach to infrastructural development, economic diversification, and tourism investment.

    As part of efforts to boost Nigeria’s economic position, the CBN governor reaffirmed his commitment to working closely with the Nigerian diaspora community in the Middle East.

    He stressed that increased remittance flows from Nigerians abroad would play a crucial role in strengthening the country’s financial sector.

    Cardoso said: “The CBN will continue implementing policies that enhance macroeconomic stability, promote private sector growth, and create high-quality jobs.”

    During a panel discussion moderated by Jihad Azour, Director of the Middle East and Central Asia Department at the IMF, Cardoso addressed critical reforms in Nigeria’s financial markets.

    Read Also: Investors, businesses differ as CBN takes inflation battle to MPC

    He highlighted that Nigeria had previously experienced a significant gap—sometimes as wide as 60 per cent—between the official and parallel market exchange rates.

    However, he noted that due to consistent policy direction, improved market confidence, and greater transparency in forex trading, the exchange rate gap has now narrowed to approximately 4-5 per cent.

    Cardoso acknowledged that Nigeria faced severe economic challenges, including capital flight, multiple exchange rate regimes, currency depreciation, high inflation, and a backlog of foreign exchange transactions.

    These issues eroded investor confidence and created instability in the financial markets.

    Upon assuming office, Cardoso prioritised clearing the backlog of outstanding transactions and reinforcing Nigeria’s commitment to economic stability.

    To curb inflation and ensure macroeconomic discipline, the CBN adopted a tight monetary policy stance, raising interest rates by 850 basis points over the past year.

    The bank also moved away from quasi-fiscal interventions, which had previously distorted the economy, and instead embraced a more orthodox monetary policy framework.

    He said petrol subsidy, along with inefficiencies in the forex market, had cost the country approximately six per cent of its Gross Domestic Product (GDP) annually.

    To strengthen Nigeria’s financial system, the CBN mandated that banks increase their capital base to build resilience against future economic shocks.

    Cardoso said the recapitalisation effort has yielded positive results, ensuring that the banking sector remains robust and capable of supporting the country’s economic growth.

    Addressing Nigeria’s financial inclusion rate, which currently stands at 74 per cent, Cardoso stressed the need for aggressive expansion to ensure that economic growth benefits all Nigerians, particularly those in underserved communities.

    The CBN governor pointed to digitalisation as a crucial tool for financial inclusion, noting that expanding mobile money services and leveraging technology—especially for gender-focused initiatives—could significantly close the financial access gap.

    According to him, Nigeria’s monetary policy decisions have been tailored to its unique economic conditions rather than global trends.

    He pointed out that while some international financial experts were initially sceptical of Nigeria’s tightening stance, the country’s approach has since been validated, with many analysts now acknowledging its effectiveness.

    Al-Humond assured Cardoso that the Saudi Arabian Central Bank was open to collaboration with the CBN to achieve mutually beneficial economic objectives.

  • ‘Nigeria’s external reserves robust enough for any shocks’

    ‘Nigeria’s external reserves robust enough for any shocks’

    The Central Bank of Nigeria has said that the $42billion  external reserves of the country, can finance importation of goods and services for more than nine months.

    This is as the apex bank assured Nigerians of better  economic fortunes in 2025.

    Governor of the CBN, Dr. Olayemi Cardoso made the declaration when he presented a performance index report to the Senate Committee on Banking, Insurance and other Financial Institutions, chaired by Senator Adetokunbo Abiru at the National Assembly, Abuja.

     “External Reserves rose from $38.35bilion in September to $42.01billion as of December 12, 2024,” he said.

    The increase in external reserves within the stated period, he explained, was fueled largely by receipts from crude oil related taxes and third party receipts in third quarter 2024.

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    “We maintained a current account surplus and saw remarkable improvements in our trade balance.

    “Our external reserves level can finance over 9.09 months  of import of goods and services or 13.91 months only, higher than the international benchmark of 3.0 months and a robust buffer against shocks,” he said.

    On cash shortage, the CBN Governor reiterated application of new policy of N150million fine against any branch of Banks caught indulging in illegal distribution of new Naira notes to currency hawkers and unscrupulous elements.

    He added that the Nigeria economy will take a better shape in the 2025 fiscal year, through policies and measures already in emplaced.

    “Distinguished Senators, as we conclude this briefing, I want to highlight that despite the challenges facing our economy, there are clear reasons for optimism.

    “The gradual stabilization of the forex market, ongoing banking sector recapitalization, positive growth trends in key sectors, especially the services sector, indicate a path toward recovery and stability,” he said.

    The Chairman of the Committee, Senator Adetokunbo Abiru (APC – Lagos East), in his response, said the CBN deserved commendation.

  • Fraudsters, kidnappers deploy PoS outfits to wreak havoc (2)

    Fraudsters, kidnappers deploy PoS outfits to wreak havoc (2)

    •Reps act on The Nation report, summon CBN gov, bank executives

    The House of Representatives on Wednesday resolved to summon Central Bank of Nigeria Governor Olayemi Cardoso, and chief executive officers of commercial banks operating in the country to propose solutions to the challenges posed by lack of documentation of Point of Sale users across the country. The development came up barely four days after we published a report about how kidnappers and other criminal elements in the country are carrying out heinous crimes using the well-intended system.

    The report published last weekend revealed how kidnappers use unsuspecting PoS operators to collect and share money collected from victims as ransom.

    The report also revealed how scammers use various means to fleece innocent citizens of their hard earned money through PoS.

    The report equally pointed out how recalcitrant PoS operators flouted the orders of the Corporate Affairs Commission (CAC) to register their business for easy monitoring.  Without considering how the move would reduce fraudulent activities carried out through system, many operators have reportedly bashed the CAC, arguing that the cost of registration would deplete the profits of the business and drive up the charges payable by their customers.

    Alarmed by the rising cases of financial crimes done through PoS, Hon. John Okafor, the member representing Ehime/Mbano/Uboma/Obowo Federal Constituency, Imo State in the House of Representatives, during Wednesday’s plenary identified the increasing challenges associated with the undocumented identities of PoS users in Nigeria.

    According to him, cases of fraudulent activities within the financial system have been established against PoS users, adding that there is “a necessity to combat such illicit practices and safeguard the integrity of financial transactions within Nigeria.”

    He said: “The House is aware that undocumented PoS transactions from both party’s identities create a loophole for fraudulent activities, such as identity theft, money laundering and unauthorised transactions.

    “By enforcing the documentation of users’ identity, the incidence of fraud will significantly reduce, and the security of financial transactions in Nigeria will be enhanced.

    “The House is aware that proper documentation of POS users’ identities fosters accountability among operators and users. This transparency will help trace transactions back to the individuals involved, holding them accountable for illegal activities.”

    The lawmaker expressed what he called regulatory bias and enforcement challenge towards due process by the relevant regulatory bodies.

    He called for immediate intervention to avert this ugly situation and “Shield Nigerians from the hands of criminals through the use of the POS system.”

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    He added: “Establishing a system for verifiable documentation of POS users’ and recipients’ identity aligns with the national and international financial regulatory requirements to prevent financial crimes and ensure compliance with anti-money laundering and know your customer regulations.”

    Following overwhelming support for the motion, the Speaker, Tajudeen Abbas, who presided over the plenary, mandated the House Committees on Digital and Electronic Banking, Finance, Banking Regulations, and Financial Crimes to invite the CBN governor and Group Managing Directors of all commercial banks and other financial institutions using POS services to appear before them.

    The committees have four weeks to report back to the House.

    Registration of PoS business will check fraud —Expert

    A fintech expert and technical resource centre manager at INLAKS Alabi Ramon Adekunle, in a telephone interview with our correspondent, said that registering with the CAC will enable the government to track transactions carried out on PoS devices and consequently check fraud.

    Beginning with how government regulations help to check fraud on ATM machines, Alabi said : “An ATM  is under the bank network and there are CBN  regulations that checkmate what the bank does and also the percentage return of bank on every transaction done on an exchange.

    “But coming to PoS,  the major charges of PoS is between the bank and the spy agent that is operating the PoS, making it a bit difficult for the government to track different transactions going on the account of PoS operators.

    And that’s why you see now that because PoS business is more viable, it is more profitable than an ATM business. You see some bankers releasing funds to PoS operators instead of loading their ATMs for customers to withdraw money. That has been a challenge.  

    “What government is looking at is to make the PoS operators to register with CAC so that they have a tracker, and if anything happens, they can easily see them as a registered entity.

    Talking about the likely challenge the PoS operators  will face for registering with the CAC, the fintech expert said: “There would be the regulatory policy from government to check them. That one is a plus to government, but they (PoS operators) will be under regulated environment, meaning that they will not be free to do whatever they are doing in any way.

    “Number two, their profit margin will drop because it will be easy for any financial body like CBN to have a concrete policy on percentage sharing between the operator, the bank and CBN, because as it is now, CBN is not making any money from PoS transactions. The gain is only between the bank and the operator.

    “Then another challenge that is likely to happen is recently, fraudulent transactions that are done on banks accounts are majorly done via PoS, because for the entity that owns that PoS, there is an extent to which they can track them.

    ‘This makes it easy for fraudsters or yahoo yahoo boys to use PoS as a means of cashing out their money because there is no way they can actually be tracked to the particular entity that owns that PoS device.”

    On an ATM, Alabi said: “If a fraudulent transaction is done, they can track it to the termal ID of the ATM in question, thereby knowing the location of where that transaction was performed.

    ‘As it is now, it is difficult for government to track that on PoS. But if they are registered, it will be easy for government to track transactions.

    “But for those operators that are having partnership operations with the yahoo yahoo boys that give them extra money for using their outlets to cash out their money, such will stop. This is a disadvantage on the side of the operators.”

    How recalcitrant PoS operators forced CAC to keep registration window open

    The failure of the CAC to carry out its threat against PoS operators who failed to register with the commission after the deadlines may have emboldened criminal elements to continue to exploit the gaps in the system to wreak financial havoc on harmless citizens.  

    On May 6, the Federal Government, acting through the Corporate Affairs Commission (CAC), set a two-month deadline for PoS companies to register their agents, merchants and individuals with the commission, aligning with legal requirements and the directives of the Central Bank of Nigeria (CBN).

    This decision was reached during a meeting between Fintechs and the Registrar-General CAC, Hussaini Ishaq Magaji, in Abuja.

    The order was flagrantly disobeyed by many operators forcing the CAC to issue a fresh statement extending the deadline.

    The statement dated July 7 reads: “The Corporate Affairs Commission wishes to notify Fintech Operators also known as Point of Sales (POS) Operators that the initial deadline of 7th July, 2024 given for the registration of sole agents, super agents and agents has been extended for a period of 60 days, beginning from 7th July, 2024 to the 5th September 2024.

    “This is to give sufficient time to Operators particularly those in remote areas who might have encountered network challenges to so register and continue with their businesses.

     “Operators who fail or refuse to register at the end of the extended deadline run the risk of losing such businesses and prosecution for aiding and abetting criminal activities.”

    The September 5 deadline also expired with a good number of PoS operators failing to register with the CAC.

    Alarmed by the defiance of the operators, the CAC on September 7 expressed concern over the inadequate compliance with the directive despite the large number of POS operators in the country.

    According to the statement, “recalcitrant operators have refused to adhere to the advice for formalization due possibly to engagements in unwholesome activities or for some reasons best known to them.”

    The CAC emphasised that it was working in collaboration with law enforcement agencies and other relevant stakeholders to implement a comprehensive enforcement and sanction framework.

    The measures may include the shutdown of non-compliant businesses and other severe legal consequences.

    “We are to make it clear that the commission is working with law enforcement agencies and other relevant stakeholders to deploy a comprehensive enforcement and sanction framework that may include not only possible shutdown but other severe legal consequences,” the statement reads in part.

    When contacted last week on the level of compliance and what the commission was doing about those who have defied its order, the commission’s Director of Press, Dominic Inyang, shockingly told our correspondent that the process was still ongoing without saying anything about dealing with erring operators as it had repeatedly said in its statements.

    Providing the Commission’s position on our request, he said: “The process is still ongoing. Compliance level is still ongoing as well hence an exact figure of PoS registered cannot be given at the moment.

    Why our members’  registration with CAC is poor – PoS operators’ boss

    The Association of Mobile Money and Bank Agents in Nigeria in September attributed the Point of Sale operators across the country’s  low turnout for the registration  with the CAC to ongoing case the association has against the Commission.

    National President of the association, Sarafadeen Fasasi, described the move by the CAC to clamp down on the association members who were yet to register with the commission as illegal.

    His words:  “We have members in the two segments of agency banking. We have sub-agents and registered businesses. Those that are registered businesses are even over 60 per cent before the CAC came out with that policy and it’s only about 40 per cent that are sub-agents.

    “We are in the court with them to say that they cannot force those to register with them and that is the outcome of what you are seeing. We are not just fighting for the 40 per cent.

    “We are fighting the illegality because if they succeed with POS, they will also go and implement the same policy on our traders in the markets, like garri and pepper sellers, because the POS people are not different from them. We are in the same space and that policy imposed on them is not about the interest of the country or payments; it is about cash out. They just want to make revenue and share the money.”

  • CBN moves to bridge $294b financing gap for women-owned MSMEs

    CBN moves to bridge $294b financing gap for women-owned MSMEs

    Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has called on financial institutions and ecosystem players to develop innovative products to help close the $294 billion financing gap faced by women-owned micro, small, and medium enterprises (MSMEs).

    This directive was given during the CBN’s commitment to the Women Entrepreneurs Finance Code (We-Fi) in Abuja.

    Cardoso stressed the importance of learning from successful global models, stating, “We don’t have to reinvent the wheel. We can copy models that have worked elsewhere and adapt them to Nigeria.”

    He also noted his personal commitment to gender equality, by referring to actions taken before assuming his current role that helped to bridge the gender gap in financial inclusion.

    Looking ahead, Cardoso assured that the CBN leadership, along with its partners, is dedicated to bridging the gender gap in access to finance. “The big picture is to ensure Nigeria’s economy thrives,” he said, urging stakeholders to view this initiative as essential for the nation’s economic development rather than a gender-specific issue.

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    Temitope Fadeyi, Head of the Financial Inclusion Delivery Unit at the CBN, provided an overview of the We-Fi Code, emphasising the importance of collaboration between regulators, development finance institutions, and financial service providers to expand access to finance for women-owned businesses.

    According to Fadeyi, 75 per cent of the potential market for women entrepreneurs in Nigeria remains untapped, contributing to the massive financing gap.

    Fadeyi further outlined three key actions for stakeholders: committing leadership to champion the initiative, expanding support for women entrepreneurs, and gathering gender-disaggregated data to monitor progress.

    The CBN, she said, is spearheading this initiative alongside partners such as the Development Bank of Nigeria and the Bank of Industry, with a call for private sector players and other stakeholders to join the national coalition.

    With these efforts, the CBN, Development Bank of Nigeria (DBN) and the Bank of Industry (BoI) are aiming to unlock new opportunities for women-led businesses and drive economic growth in Nigeria.

  • Cardoso and CBN monetary policies

    Cardoso and CBN monetary policies

    By Bashir Jalal

    During a recent address at the Harvard Club of Nigeria in Lagos, Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), articulated a critical sentiment: “Trust is the currency of central banking.” He emphasised that when public trust in an institution wanes, the effectiveness of its policies is compromised.

    “In the face of economic challenges,” Cardoso said, “it is essential to focus on core objectives—restoring the institution’s credibility, building trust in the financial system, and, most importantly, containing inflation. These goals are foundational to any meaningful recovery.”

    While Cardoso acknowledged that the CBN has yet to meet its inflation targets, the governor remained optimistic. He pointed to recent data from the National Bureau of Statistics (NBS), which indicated declines in inflation for July and August 2024, as evidence that the central bank is heading in a positive direction.

    However, there seems to be a significant knowledge gap among many citizens regarding the differences between fiscal and monetary policies, both of which are vital to a nation’s development as they are used to regulate economic activity and accelerate growth.

    Several governments across the world are known to employ two primary tools to manage the economy: fiscal policy and monetary policy. Each plays a crucial role in shaping economic conditions but operates through distinct mechanisms and objectives.

    Fiscal policy, managed by government authorities such as the Ministry of Finance, encompasses a variety of strategies involving government spending, taxation, and budget management. Its core goals include stimulating economic growth, reducing poverty and unemployment, and stabilizing prices.

    Some examples of fiscal policy in action include substantial infrastructure projects, strategic tax cuts to boost consumer spending, raising taxes to control inflation, and social welfare programs tailored to support vulnerable populations.

    Conversely, monetary policy is the purview of central banks like the CBN, focusing on regulating interest rates, managing currency supply, and overseeing credit management. The primary objectives of monetary policy are to ensure financial stability and promote sustainable economic growth.

    Central banks utilise various instruments, including interest rates adjustment, quantitative easing implementation, reserve requirements modification, asset purchases, and open market operations, among others, to influence economic conditions.

    Read Also: Cardoso focuses on economic recovery

    While fiscal policy exerts a direct impact on economic growth through government expenditures and tax strategies, monetary policy influences the economy by adjusting interest rates and controlling the money supply. This distinction underscores the complementary nature of both policies in effective economic management.

    Despite Cardoso’s doggedness and commendable efforts to stabilize inflation, eradicate sharp practices in the foreign exchange market, and regulate the exchange rate, some analysts ignore the complexity of the fiscal landscape of Africa’s biggest nation.

    Critics usually point to the weakening of the naira and high inflation rates as indicative of mismanagement without considering the broader fiscal context. Commentators also expect the naira to stabilise at N500 to $1, failing to grasp the multifaceted nature of Nigeria’s economy.

    Cardoso has indeed taken a measured approach, particularly in light of the inflationary burdens incurred by previous administrations’ use of “Ways and Means” advances. He has been forthright in not extending similar privileges to the current government until prior obligations are settled.

    Moreover, security challenges that plague the North Central and North East regions worsen economic issues. Farmers in these areas find it hard to access their land due to banditry, which has undermined purchasing power, exacerbated poverty, and contributed to Naira’s depreciation.

    Attributing Nigeria’s economic struggles solely to Cardoso misses the interconnectedness of monetary and fiscal policies. It is pertinent to mention that financial mismanagement at the state and local government levels are beyond the CBN chief’s purview but gravely impact economic stability.

    For instance, the behaviour of some officials fond of speculating on foreign currency markets after the distribution of funds from the Federation Account Allocation Committee (FAAC) inflates the dollar’s value and undermines the naira. Such practices highlight how crucial fiscal decisions can compound monetary issues.

    The forces shaping the value of the naira extend beyond Cardoso’s control, encompassing factors like low domestic production exacerbated by insecurity, a high demand for imported goods, dwindling exports, and the substantial costs associated with education abroad and medical tourism.

    Ironically, the members of the elite who verbally attack the federal government also contribute to naira’s weakness. In most cases, they prefer foreign products and services, even when local alternatives exist. Furthermore, rising energy prices affect inflationary pressures resulting from fiscal decisions.

    As misinformation spreads, it is imperative for advocates of truth to counteract unfounded narratives that unfairly malign the monetary authorities. The CBN has undertaken substantial efforts to stabilize Nigeria’s monetary economy and is shifting focus to other areas that require attention.

    Understanding the symbiotic relationship between fiscal and monetary policies is essential in addressing Nigeria’s economic problems. To effectively combat inflation and strengthen the naira, collaboration between fiscal and monetary authorities is of the utmost importance.

    From all indications, the Central Bank of Nigeria under Cardoso is aware of its enormous responsibilities and committed to efficient implementation of monetary and exchange rate policy and management. Achieving sustainable solutions requires collective efforts from stakeholders.

    Bashir Jalal writes from Tarauni, Kano.

  • Cardoso focuses on economic recovery

    Cardoso focuses on economic recovery

    The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has reaffirmed the Bank’s commitment to transparency and market stability as essential pillars for economic recovery.

    Speaking at an address to the Harvard Club of Nigeria at the weekend on the theme: “Leadership in Challenging Times: Restoring Credibility, Building Trust, and Containing Inflation,” Cardoso outlined the critical decisions the CBN has taken under his leadership, emphasising the need to rebuild trust in the country’s financial system.

    At the heart of his address was the implementation of the Electronic Foreign Exchange Matching System (EFEMS), which he described as a cornerstone of the apex bank’s strategy to enhance transparency and accountability in forex transactions.

    “Trust is the currency of central banking. If the public loses trust in the institution, the efficacy of its policies diminishes. Our decision to implement the Electronic Foreign Exchange Matching System (EFEMS) is rooted in this understanding.

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    By enhancing transparency and providing more accurate oversight of forex transactions, we send a strong signal that the CBN is serious about fair and efficient markets,” Cardoso said.

    As he approaches his one-year anniversary in office, Cardoso reflected on the challenges of leading the CBN in a period of economic uncertainty. Acknowledging the difficult and sometimes unpopular choices that central bank leadership demands, he noted that building public confidence and trust in the institution was critical for achieving long-term stability.

    “In the face of economic challenges, it is imperative to focus on core objectives—restoring the credibility of the institution, building trust in the financial system, and, most critically, containing inflation. These are not just strategic goals; they are foundational to any meaningful recovery,” the governor said.

    Cardoso also recalled the hard decisions made shortly after assuming office, particularly around the floating of the naira, a move that stirred significant public debate.

    He emphasised that the decision was necessary to close the widening gap between the official and parallel market exchange rates, which had fostered arbitrage and speculation, undermining trust in the system.

    “Floating the naira, a decision met with considerable public criticism, was necessary to bring the official exchange rate closer to market reality. The disparity between the official and parallel rates had encouraged arbitrage and speculation, eroding trust in the market,” Cardoso said.

    He further explained that this bold step was part of a broader strategy to strengthen credibility.

    “Credibility is earned by consistency. The decision to close this gap, while painful in the short term, sent a message to market participants that the CBN was committed to transparency and sound monetary policy,” he added, noting that speculative trading had been reduced, and stability was gradually returning to currency markets.

    The governor also reaffirmed that containing inflation remained the CBN’s primary focus, acknowledging that while it has not yet fully achieved its inflation target, recent trends offer some optimism.

    He pointed to data from the National Bureau of Statistics (NBS), which reported declines in inflation for both July and August 2024, as evidence that the Bank’s measures are yielding results.

    “Our decision to raise the Monetary Policy Rate (MPR) to 27.25 percent was a bold move. Higher interest rates, while painful for borrowers, are necessary to curb excess money in circulation and control inflation.

    “Leadership is about making hard choices to secure long-term stability over short-term comfort in moments like these,” Cardoso explained.

    Reflecting on his tenure, Cardoso shared several leadership lessons from navigating Nigeria’s economic challenges.

    He stressed the importance of maintaining focus on the CBN’s core mandate of price stability, despite the numerous political and economic pressures.

    “Leading through challenging times means avoiding the temptation to take on too many initiatives. The Central Bank must focus on its core mandate—price stability. It is easy to become distracted by various political and economic pressures, but as a leader, one must prioritise,” he said.

    Finally, Cardoso underscored the importance of clear communication in building public trust, noting that the Bank’s focus on transparency has been central to its strategy.

    “Effective communication is as important as the right policy. Clear and open communication fosters trust. From publishing the results of the Dutch Auction to ensuring regular updates on economic data, transparency has been our guiding principle.”

    As Nigeria grapples with complex economic issues, Cardoso’s message was clear: the CBN is committed to taking the necessary steps to ensure long-term economic stability, even if those steps are politically contentious or challenging in the short term.

    “Trust is built on the belief that a central bank will take the necessary steps to ensure economic stability, even when those steps are uncomfortable or politically contentious,” he said.

  • Why we prioritised $7.5b FX backlog clearance, by Cardoso

    Why we prioritised $7.5b FX backlog clearance, by Cardoso

    The Central Bank of Nigeria (CBN) decided to settle $7.5 billion forex backlog owed, to build investor confidence in the domestic economy and build lasting credibility for the country.

    CBN Governor, Olayemi Cardoso disclosed this yesterday during the BusinessDay CEO Forum 2024 with the theme: “Leadership In Tough Economic Times”, held in Lagos.

    Speaking during the Fireside discussion, the CBN boss said he was advised against making the backlog clearance a priority at the inception of his tenure, because of the impact it will have on the country’s dollar position.

    “People thought, there was no need to prioritise the forex backlog clearance,” he said, “ but they failed to realise that the country was in a state of crisis, and loss of confidence.”

    He said: “ Even without that, it is important, that you hold high your integrity. As a bank, your yes, must be yes, that is a big major step in building credibility. It is very tempting to push that aside, but ultimately, I was convinced that if we did not do that at that time, we would pay the price as a country.”

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    Cardozo said findings also showed that clearing of the FX backlog improved the country’s outlook, adding that foreign investors as well as multilateral organizations, such as the World Bank see this move as a bold intervention to improve the economy’s sustainability in the long run.

    On the state of the naira, the CBN boss said that by the time he assumed leadership of the apex bank, the forex market was dominated by people who did not follow policy guidelines.

    His words: “When we assumed leadership at the CBN, we saw distortions from illicit flows, people not abiding by the rules, and it was very important we addressed that to make the market much better. We found pushback, as people who did things in a certain ways wanted to continue.

    ”He said at that time, a good  number of investors came in, left and returned after they understood the CBN’s plans.

    He said a lot of the swings in the market are beginning to settle because investors have  a better understanding of the Nigerian market place.

    “It is important for those on the other side to recognise that we will continue with what we are doing. We believe that with time, stakeholders are becoming more comfortable with the way the market is being run,” he said.

    On the CBN’s policy that mandated International Oil Companies (IOCs) on how to repatriate their funds, he said the policy had push back.

    He said the there was dialogue between the apex bank and IOCs, adding that the reassurances calmed them down, stating that more forex contributions are being expected from the oil sector.

    On why the CBN insisted that retained earnings should not be part of banks’ recapitalisation capital, Cardoso said it was the need to ensure that the exercise produces resilient banking system.

    “As long as I can see, the banks had enough time to prepare for this. Two years is a long time. They should take their time, no need to be in any rush. We want to build a resilient banking system, and that’s not what you would like to do overnight,” he said.

    Cardoso said the banks horizon has been expanded to accommodate different kinds of services. “We have no doubt that we must move to a more transparent system, in the banking industry, and the retained earnings exclusion will help achieve that,” he said.

    The CBN chief also spoke on the rising interest rate and impact on economic growth. According to him, the interest rate is not set by the CBN, but the MPC which comprise of independent minded thinking people.

    “The MPC members are people who are not given to emotion, but data. They go along with what the data say. The MPC has said their major target is to rein in inflation. We were all there when a lot of money got into the system. We saw the Ways and Means went into N27 trillion. We saw intervention funds stood at N10.5 trillion.  These policies have their consequences,” he said.

    He however, said that month-on-month inflation rate has dropped by  50 per cent and that remains a good signal for the economy, adding that doing things right, will help the country to achieve its desired economic growth.

    Speaking on the qualities that may have contributed toward his being made CBN governor, he said it is his commitment to policies that impact positively on the lives of the people.

    “One particular thing is very dear to me. As a policy maker, I am very, very committed, to one thing, and that is that at the end of the day, we make policies that impact positively on the man on the street,” he said, pointing out that listening is one very important attitude of his leadership style.

    “Also, communication is important. Nobody needs to tell you that you need to come out there to talk to the people. We have continued to talk to the media, to give an idea on the way forward,” he stated.

  • CBN governor seeks stronger budget processes

    CBN governor seeks stronger budget processes

    Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, has called for stronger budgetary processes and accounting systems to improve transparency and accountability in public financial management.

    Speaking at the Joint World Bank, International Monetary Fund (IMF), and West African Institute for Financial and Economic Management (WAIFEM) regional training on the Annual Borrowing Plan (ABP) in Abuja, Cardoso also highlighted the importance of a comprehensive approach to debt management.

    Represented by Dr Ladies Bala-Keffi, the CBN governor noted that developing effective Debt Management Strategies (DMS) and Annual Borrowing Plans (ABP) requires a coordinated institutional framework and a stable macro-economic environment. This means that all parts of the government need to work together to manage public debt effectively, ensuring that policies are aligned and stable.

    Cardoso also stressed the importance of investing in the training and development of debt management professionals, stressing that by continuously providing them with necessary training, mentorship, and technical assistance, the government can ensure that these professionals are well-equipped to handle complex debt management tasks.

    Regularly disclosing debt portfolios and borrowing activities is crucial for building trust with investors, creditors, and the public. Cardoso pointed out that transparency in these areas can help reduce borrowing costs and promote more efficient debt management.

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    Director-General of WAIFEM, Dr. Baba Yusuf Musa, highlighted the unique challenges faced by debt managers in the West African sub-region.

    Represented by Mr. Yakubu Aliyu, the DG identified these challenges to include volatile commodity prices, high debt levels, limited fiscal space, fluctuating exchange rates, and rising borrowing costs. Such challenges threaten debt sustainability and economic stability, affecting the growth and well-being of citizens.

    Dr. Musa explained that while many countries in the region develop Medium-Term Debt Strategies (MTDS), implementing these strategies effectively can be difficult. The training on ABP Development is designed to help overcome these challenges by providing a structured framework for operationalizing the MTDS on an annual basis. This ensures that strategic debt management objectives are translated into specific borrowing activities and targets for the fiscal year.

    The ABP aligns with government budgetary and fiscal policy objectives, determining the sources of financing, types of instruments, and maturities while considering market conditions. The Issuance Plan, which operationalizes the ABP, outlines the timing and details of each debt issuance, ensuring a steady and predictable supply of funds to meet the government’s financial obligations.

    Continuous monitoring and evaluation of the ABP process are essential to adapt to changing economic conditions and policy priorities. This promotes efficient public debt management, ensuring that the government’s financial needs are met in a sustainable manner.

    This focus on improving budgetary and debt management practices is expected to enhance transparency, accountability, and overall economic stability in Nigeria and the West African region.

  • Making the CBN work again under Cardoso

    Making the CBN work again under Cardoso

    By Mariam Mohammed

    Nigeria is in the middle of a very important shift in its economic structure. One man, amongst others, at the heart of this is the Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso.

    A truly traditional symbol of what a CBN Governor should be: urbane, measured, focused and averse to political showmanship.

    Over the years, there was a steady decline of corporate governance at the country’s apex bank.

    Since the presidency of former President Goodluck Jonathan and Muhammadu Buhari, those entrusted with the country’s monetary policy were more giving to showboating than steadying the inherent economic turbulence leading to runaway inflation, bloated backlog of foreign exchange obligations, and outright sleaze at the CBN.

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    It is gratifying to note that there is a bright spot on the horizon owing to the unprecedented putrid flowing from the apex bank and the first in history of the arraignment of a former top gun of the CBN.

    It is no longer news that the CBN under the former helmsman, Mr. Godwin Emefiele, neglected the key functions of the bank to regulate money institutions, insulate it from the vagaries of politics and stablise the markets. Rather, the bank became a soapbox for political chicanery so much so that an incumbent governor will throw his hat into the political ring to run for presidency and flaunt it without let.

    However, there is a measure of confidence building and the markets are responding favorably to it. First, the settling of $7 billion forex arrears particularly to foreign airlines demonstrates that the Nigerian government is committed to its contractual obligations.

    Also, the naira rebound against the dollar and other major currencies even when it seemed all hope was lost speaks to the vision and strategic policies of Cardoso.

    Only a few weeks ago, the naira was trading at almost N2, 000 to the Greenback, but by this weekend, currency speculators are counting their losses as the Naira was exchanging for N1, 350 to the dollar.

    Complementing this economic progress, there is the remarkable boost in the country’s external reserves, which increased by $993 million to $34.11 billion as of March 7, 2024, reaching an eight-month high.

    This could not have been possible without the apex bank governor strengthening processes for the Diaspora to make remittances and be guaranteed of getting value for them. This is coupled with heightened interest from foreign investors in local assets, including government debt securities.

    To give context to this, in early March, foreign investors oversubscribed by 79 per cent the FG’s N500 Billion at the Open Market Operations (OMO) auction.

    Beyond ensuring legitimate flow of foreign investments, the Governor has not let his eyes off the activities of illicit flows which some have been traced to terror financing. To stem the scourge, the CBN moved against one such entity, Binance, the multi-trading forex and crypto platform.

    Speaking on the matter, Cardoso was spot on when he said, “We are concerned that certain practices go on that indicate illicit flows, going through a number of these entities and suspicious flows. In the case of Binance, in the last year, $26 billion has passed through Binance Nigeria from sources and users who we cannot adequately identify.”

    This is a move every responsible and patriotic Nigerian ought to commend taking into cognizance the destruction and unimaginable loss of lives linked to terrorism and its financing. Besides, this is expected from every government that pays fidelity to its citizens’ welfare and security.

    Some Nigerians who have kicked against the move to sanction the crypto firm should note that in late November 2023, Binance was sanctioned by US authorities and made to pay one of the largest fines in corporate history. The firm agreed to pay $4.3 billion to the U.S. Commodity Futures Trading Commission (CFTC), the Department of Justice and other U.S. government agencies over money laundering and other charges.

    Nigeria cannot be an exception at a time of global forex crisis, financial instability and efforts to stem terror financing. Rather the applause for Cardoso and his management team at the CBN should be resounding and high.

    While it is noted that the Governor is on track, the warning needs to be served that the manufacturing numbers have to be worked on to ensure that there is an upward swing to increase productivity and shore up the employment numbers. This will require working with those at the Ministry of Finance and other segments of the economy in the fiscal side. It is already showing as the CBN has demonstrated greater synergy building with the NNPC Ltd, Ministry of Agriculture and Food Security amongst others.

    Granted that the economic shift will not happen overnight, Nigerians need to know regularly what measures are being undertaken so as their buy-in can be guaranteed.

    Cardoso and his team need to unpack their short to long term strategy to retool the economy and offer a clear roadmap as it balances out a manufacturing-led economy and one that’s service-oriented.

    With the benefit of hindsight, it is significant that Cardoso should beware of palace courtiers and the intoxicants of early achievement in order not to suffer the fate of the former Chairman of the Federal Reserve Alan Greenspan.

    Greenspan, who spent nearly two decades at the US Federal Reserve, was once hailed as the omnipotent “maestro” of the U.S. economy, but his reputation suffered in the aftermath of the 2008 financial crisis.

    Sebastian Mallaby, winner of the Financial Times and McKinsey Business Book of the Year Award in 2016, argues that most histories of the 2008 crisis have ascribed blame to Greenspan’s excessive faith in the self-policing efficiency of markets. So, Governor Cardoso has to create stability in the market, and should resist the temptation when all is majorly “settled” to limit himself to containing fluctuations in inflation, while failing to limit leverage and bubbles. The end goal should not just be price stability, rather financial stability.

    But for now, it is worthwhile to commend President Bola Tinubu for a strategic pick in the person of Cardoso who is truly the star boy of the moment after a season of anomie at the CBN.

    • Mariam is an Abuja-based public affairs analyst