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Tag: The Central Bank of Nigeria (CBN)

  • CBN reforms drive naira recovery, restore card use abroad

    CBN reforms drive naira recovery, restore card use abroad

    Over the past two years, the Central Bank of Nigeria (CBN) has implemented a series of tough reforms aimed at addressing long-standing challenges to price and exchange rate stability. These reforms have begun to yield measurable results — including a rise in international reserves, improved access to forex through official channels, a sustained naira rally across markets, and the resumption of overseas transactions with naira cards by commercial banks, writes Assistant Editor COLLINS NWEZE

    Until recently, one of the biggest challenges facing Nigeria’s economy was limited access to foreign exchange (forex). This constraint often forced businesses and travelers to rely on the parallel FX market, creating arbitrage opportunities that fueled speculation and further destabilized the system. In response, the Central Bank of Nigeria (CBN) launched a series of bold reforms aimed at attracting foreign capital, stabilising prices and restoring confidence in the exchange rate regime.

    In 2023, under a new administration and the leadership of CBN Governor Olayemi Cardoso, the foreign exchange market was liberalized. The central bank ended its financing of fiscal deficits, while the federal government reformed the costly fuel subsidy system, improved revenue collection, and moved to curb inflation.

    These coordinated measures have begun to yield results. International reserves have grown, and access to forex through the official market has significantly improved. Nigeria returned to international capital markets in December and has since earned positive credit rating upgrades. Meanwhile, the emergence of a major private refinery signals progress toward value addition in a fully deregulated petroleum sector.

    Naira cards resume international usage as naira gains

    With rising dollar liquidity, Nigerian banks have lifted over three years moratorium on the use of naira-funded debit cards abroad as dollar liquidity rises. This has also led to significant appreciation of the naira against the dollar and other global currencies. Already, the naira has made significant appreciation in recent months.  In the parallel market, the naira appreciated, closing at N1,550/$1 on Friday—up from N1,555/$1 on Thursday. From Monday to Wednesday, the currency remained stable at N1,560/$1, according to market surveillance in Lagos.

    At the official rate, the naira ended last week at N1,532/$1, stronger than it exchanged the previous week. Three Tier-1 banks and mid-tier bank, United Bank for Africa (UBA) Plc, FirstBank, GTBank and Wema Bank Plc respectively, have announced the resumption of international transactions on their naira debit cards. The development comes about three years after many banks suspended international transactions on naira debit cards or dip in dollar liquidity, forcing many local lenders to restrict transactions of local cards abroad. Transactions are however, allowed for dollar-funded cards, usually linked to cardholders’ domiciliary accounts. In recent months, analysis of FX inflows in the last few months showed that Nigeria attracted $5.96 billion monthly inflows from May 2025 till date.

    Industry report showed that Nigeria’s foreign exchange market witnessed a significant boost in May, with total inflows rising by 62.0 per cent month-on-month (M-o-M) to $5.96 billion, driven largely by increased participation from domestic and foreign investors. This marked one of the highest inflow level in recent months and signals improving market sentiment amid macroeconomic reforms and a relatively stable naira. In emailed note to investors, analysts at Financial Derivatives Company Limited attributed rising FX inflows to surge in oil prices and multiple inflow channels created by the Central Bank of Nigeria. 

    The CBN has in recent months, activated multiple FX sources to increase dollar inflows, boost dollar access to manufacturers and retail end users and support naira recovery across markets. From moves to improve diaspora remittances through new product development, the granting licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller FX model, and enabling timely access to naira liquidity for IMTOs, the apex bank has simplified dollar-inflow channels for authorized dealers and other players in the value chain.

    In a notice to customers, the UBA said the resumption aligns with its continued commitment to providing clients with seamless and enhanced banking experiences. “In line with our continued commitment to providing you with seamless and enhanced banking experiences, we are pleased to inform you that all UBA Premium Naira Cards, including Gold, Platinum, and World variants are now enabled for international transactions.

    “This means you can now use your Premium Naira Card for everyday payments, online shopping, POS, and ATM transactions across the world, with more ease and flexibility. If you haven’t used your card recently, now’s a great time to rediscover the convenience and prestige that comes with being a UBA premium cardholder,” the bank said.

    Also announcing the development in a recent statement, Wema Bank said customers can now “pay in dollars” with their naira cards. “Your Wema Naira Mastercard just went global! Now you can pay in dollars on all your favourite international platforms; Amazon, eBay, AliExpress? Netflix, Spotify, YouTube,” the bank said.

    In emailed note to customers, FirstBank said its Naira Mastercard can now be used for international transactions. “Shop online or spend up to $500 every month on your preferred channel seamlessly,” the bank said.  Guaranty Trust Bank pegged its quarterly transaction limits across different channels at $1,000 for online and PoS transactions while ATM transactions are limited to $500.

    The banks had earlier announced the resumption of international transactions on their naira debit cards. In a report, head of financial institutions ratings at Agusto & Co, Ayokunle Olubunmi, said the improved liquidity in the foreign exchange (FX) market supported banks’ decision to reactivate their naira cards for global transactions. “The moderating premium on the parallel market transactions and the reduced arbitrage opportunities is also responsible for the decision,” he said.

    Records showed that many banks, including Stanbic IBTC Bank, United Bank for Africa, Access Bank, Standard Chartered Bank Nigeria, GTBank among others have at some point, reviewed international spending limit on naira cards, while at other times suspended transactions on such cards unless they are linked to dollar-funded domiciliary accounts. Analysts said that by allowing travelers use their naira-cards abroad, the banks are making it easy for cardholders to pay their hotel bills, make reservations and carry out other transactions using their debit cards.

    FX reserves position rises as net FX reserve accretion surges

    Cardoso-led CBN recently announced quantum leap in the net FX reserve position at $23.11 billion at the end of last year. The CBN boss had, upon assuming office in October 2023, prioritised reforms to rebuild Nigeria’s economic buffers and strengthen resilience. In the foreign exchange market, the apex bank 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 $33.22 billion in December 2023. “Over the past year, we have undertaken critical reforms to unify Nigeria’s exchange rate, eliminating distortions and restoring transparency. This unification has enabled us 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, we are introducing an electronic FX matching system, which has proven effective in other markets,” Cardoso said.

    According to the apex bank data, NFER stood at $23.11 billion, the highest level in over three years, a marked increase from $3.99 billion at year-end 2023, $8.19 billion in 2022, and $14.59 billion in 2021. The NFER, which adjusts gross reserves to account for near-term liabilities such as FX swaps and forward contracts, is widely regarded as a more accurate indicator of the foreign exchange buffers available to meet immediate external obligations. Gross external reserves also increased to $40.19 billion, compared to $33.22 billion at the close of 2023.

    The increase in reserves reflects a combination of strategic measures undertaken by the CBN, including a deliberate and substantial reduction in short-term foreign exchange liabilities – notably swaps and forward obligations. The strengthening was also spurred by policy actions to rebuild confidence in the FX market and increase reserve buffers, along with recent improved foreign exchange inflows – particularly from non-oil sources.

    The result is a stronger and more transparent reserves position that better equips Nigeria to withstand external shocks. The expansion occurred even as the CBN continues to reduce short-term liabilities, thereby improving the overall quality of the reserve position. “This improvement in our net reserves is not accidental; it is the outcome of deliberate policy choices aimed at rebuilding confidence, reducing vulnerabilities, and laying the foundation for long-term stability. We remain focused on sustaining this progress through transparency, discipline, and market-driven reforms,” Cardoso said.

    Reserves have continued to strengthen in 2025. While the first quarter figures reflected some seasonal and transitional adjustments, including significant interest payments on foreign-denominated debt, underlying fundamentals remain intact, and reserves are expected to continue improving over the second quarter of this year. Going forward, the CBN anticipates a steady uptick in reserves, underpinned by improved oil production levels, and a more supporting export growth environment expected to boost non-oil FX earnings and diversify external inflows.

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    The CBN said it remains committed to prudent reserve management, transparent reporting, and macroeconomic policies that support a stable exchange rate, attract investment, and build long-term resilience. Foreign capital inflows to the domestic economy remains crucial elements in the drive to achieve monetary and fiscal policy stability. The apex bank is cultivating more sources of FX to increase dollar inflows, boost access to manufacturers and retail end users. From moves to boost diaspora remittances through new product development, the granting licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller FX model, and enabling timely access to naira liquidity for IMTOs, the CBN has simplified dollar-inflow channels for FX dealers to boost business and economic growth.

    President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said the policy shifts showed the level of creativity, policy and hard work the Cardoso puts in ensuring that more forex flows into the economy and remain accessible to businesses. He said diaspora remittances to Nigeria, estimated at $23 billion annually remain a reliable source of forex to the domestic economy. There are also other sources and policies that are being explored by the apex bank to keep dollar inflows coming.

    Way forward

    In emailed report, the IMF’s mission chief to Nigeria and an assistant director in the IMF’s African Department, Axel Schimmelpfennig disclosed that to address these challenges, Nigeria needs stronger and more sustained growth to lift millions of people out of poverty and food insecurity, which is what the authorities are focusing on. “This does not happen overnight. In the meantime, making growth more inclusive also requires scaling up the existing cash transfer system.  Second, as an essential ingredient for economic development, Nigeria needs an effective budget framework. Delivering effective investments in people and infrastructure requires realistic budget assumptions, strong expenditure management, and transparent implementation and reporting—which, in turn, can strengthen accountability. For its part, monetary policy should continue to decisively tackle inflation and reduce economic uncertainty,” he said.

  • Forex inflows from IMTOs rise by 44.5% to $4.76b

    Forex inflows from IMTOs rise by 44.5% to $4.76b

    The value of foreign exchange inflows to the economy through the International Money Transfer Operators (IMTOs) rose sharply in 12 months to $4.76 billion, the Central Bank of Nigeria (CBN) quarterly statistical bulletin has shown.

    The report, which covered inflows in 2024,  represents a significant 44.5 per cent increase from the $3.30 billion recorded in 2023.

    The IMTO inflows continue to be a vital source of foreign currency for Nigeria, supporting families, businesses, and the broader economy amid ongoing FX market challenges.

    The year began with a strong performance in January 2024 as inflows surged 32.5 per cent year-on-year to $390.86 million, compared to $295.21 million in January 2023.

    This early momentum was maintained in February, with inflows increasing by 67.3 per cent, rising to $326.91 million from $195.23 million the previous year.

    March continued the positive trend, with IMTO inflows hitting $363.76 million in 2024, up 30 per cent from $279.79 million in March 2023.

    April saw a leap, with inflows reaching $466.11 million, an 83.3 per cent increase from April 2023’s $254.26 million, marking the highest year-on-year percentage growth in the first half of the year.

    May recorded inflows of $404.75 million in 2024, a 45.3 per cent rise compared to $278.54 million the year before.

    June was a relatively flat month-on-month but still strong year-on-year, with inflows at $389.79 million, up 40.2 per cent from $278.04 million in June 2023.

    July and August were the standout months for IMTO inflows, posting the highest volumes of the year.

    July 2024 inflows jumped to $552.94 million, more than double the $240.35 million recorded in July 2023, representing a 130% year-on-year increase.

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    August maintained this peak momentum with inflows rising to $585.21 million, a 116% increase from $271.24 million in August 2023.

    These two months alone accounted for nearly a quarter of the total inflows for the entire year, highlighting their critical role in Nigeria’s FX ecosystem.

    The final four months of 2024 showed a mixed pattern of inflows, reflecting broader economic uncertainties and seasonal effects.

    September recorded $336.61 million in IMTO inflows, up 40.8 per cent from $238.98 million in the same month of 2023.

    October’s inflows rose modestly to $378.85 million, a 29.1 per cent increase year-on-year. However, November saw a sharp decline, with inflows dropping by 22.1 per cent to $252.28 million from $324.20 million in November 2023.

    December ended the year on a more positive note, with inflows rebounding to $316.59 million, a 9.1 per cent increase compared to $348.33 million in December 2023.

    The surge in IMTO inflows is closely tied to the reforms introduced by the CBN under Governor Cardoso since his assumption of office in September 2023.

  • CBN revises foreign exchange sourcing, documentation rules for PAPSS

    CBN revises foreign exchange sourcing, documentation rules for PAPSS

    The Central Bank of Nigeria (CBN) has announced changes to the foreign exchange sourcing and documentation requirements for transactions conducted through the Pan-African Payment and Settlement System (PAPSS) in Nigeria.

    These updates are aimed at facilitating smoother and more efficient cross-border transactions within Africa.

    According to a statement on Monday by Hakama Sidi Ali (Mrs.), Acting Director of Corporate Communications, Authorised Dealer Banks (ADBs) are now permitted to source foreign exchange for PAPSS settlements directly from the Nigerian Foreign Exchange Market, eliminating the need for recourse to the CBN. 

    This measure is expected to improve liquidity and enhance the speed of settlement processes for cross-border payments.

    The revised guidelines are contained in the “Revised Documentation Requirements for PAPSS,” issued in Abuja, and take immediate effect.

    Other key provisions introduced include the certification of all export proceeds repatriated via PAPSS by the relevant processing banks. This requirement aims to maintain regulatory compliance and ensure transparency in international trade transactions.

    Furthermore, a new, simplified documentation process has been introduced for low-value transactions. Individuals undertaking transactions up to $2,000 (or its equivalent in naira) and corporate entities with transactions up to $5,000 can now rely on basic Know-Your-Customer (KYC) and Anti-Money Laundering (AML) documents previously submitted to their banks. 

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    However, transactions exceeding these thresholds must comply fully with documentation requirements as stipulated in the CBN Foreign Exchange Manual and related circulars.

    In addition, applicants are now expected to ensure that all regulatory documents required for the clearance of goods are readily available. This responsibility shift is designed to expedite trade processing and strengthen accountability among cross-border traders.

    According to Mrs. Sidi Ali, these adjustments are part of CBN’s ongoing efforts to promote seamless intra-African trade, drive financial inclusion, and enhance operational efficiency for Nigerians participating in cross-border transactions within the continent.

    PAPSS, launched in January 2022 by the African Export-Import Bank (Afreximbank) in collaboration with the African Union and the African Continental Free Trade Area (AfCFTA) Secretariat, operates as a centralized platform for payment and settlement of transactions across Africa. 

    By enabling payments in local currencies, the system reduces dependency on third-party currencies, lowers transaction costs, and supports the rapid expansion of trade activities under the AfCFTA framework.

    The CBN, through a circular referenced TED/FEM/PUB/FPC/001/006 dated April 28, 2025, detailed these changes and encouraged banks across the country to fully adopt PAPSS for originating transactions. 

    Exporters, importers, and individuals have been advised to familiarize themselves with the new requirements and leverage the opportunities provided by PAPSS to carry out efficient, secure, and cost-effective cross-border payments within Africa.

    The latest directive is expected to strengthen Nigeria’s participation in the continental trade framework and boost economic integration efforts across African markets.

  • N5.7b judgement debts: CBN, NDIC appeal delayed over technical lapses

    N5.7b judgement debts: CBN, NDIC appeal delayed over technical lapses

    The appeal filed by the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) against the National Industrial Court’s judgment ordering them to settle over N5.7 billion in unpaid entitlements for ex-staff of non-consolidated banks was delayed due to an administrative error.

    The case, scheduled for hearing on last Monday at the Court of Appeal, Igbosere Division, Lagos, could not proceed because the presiding judge, Justice Paul Bassi, had previously ruled in favor of the respondents at the lower court before his promotion.

    Recognizing this conflict of interest, Justice Bassi informed the respondents’ counsel, Tayo Oyetibo, SAN, that the case would be reassigned to another judge, with a fresh date to be communicated.

    After the adjournment, Oyetibo addressed his clients, emphasising that the appellants could have objected had Justice Bassi proceeded with the case.

    “We came here battle-ready today, but I would like to say today is not yet your day. When we get the new date, we’ll let you know. You’ll all be happy at the end of the day,” he assured them.

    Meanwhile, Magnus Maduka, Chairman of the Association of Ex-Staff of Non-Consolidated Banks, while speaking with our correspondent exclusively, expressed optimism about the outcome, believing that justice remained on their side.

    Reflecting on the legal battle that began in 2017, Maduka remained hopeful, citing past victories as a sign of positive prospects.

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    “I think the worst is over. Most of what could have made our case a bad case has been resolved. We do have a case and we are trusting God; that’s why we won at the National Industrial Court,” he said.

    He also noted the irony of the situation, where the same judge who ruled in their favor was initially scheduled to preside over the appeal. Despite the delay, he maintained confidence in the judiciary, stating, “We are very positive about the judiciary, and it has done well in this regard.”

    It will be recalled that the banking consolidation exercise introduced by the then CBN governor, Prof. Chukwuma Soludo in 2006, significantly transformed the financial sector.

    Several banks that failed to meet the new ₦25 billion capital requirement were forced to shut down, resulting in mass layoffs. Unfortunately, many employees of these non-consolidated banks lost their jobs without receiving any benefits.

    The appeal filed by the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) against the National Industrial Court’s judgment ordering them to settle over N5.7 billion in unpaid entitlements for ex-staff of non-consolidated banks was delayed due to an administrative error.

    The case, scheduled for hearing on March 24 at the Court of Appeal, Igbosere Division, Lagos, could not proceed because the presiding judge, Justice Paul Bassi, had previously ruled in favor of the respondents at the lower court before his promotion.

    Recognizing this conflict of interest, Justice Bassi informed the respondents’ counsel, Tayo Oyetibo, SAN, that the case would be reassigned to another judge, with a fresh date to be communicated.

    After the adjournment, Oyetibo addressed his clients, emphasizing that the appellants could have objected had Justice Bassi proceeded with the case.

    “We came here battle-ready today, but I would like to say today is not yet your day. When we get the new date, we’ll let you know. You’ll all be happy at the end of the day,” he assured them.

    Meanwhile, Magnus Maduka, Chairman of the Association of Ex-Staff of Non-Consolidated Banks, while speaking with our correspondent exclusively, expressed optimism about the outcome, believing that justice remained on their side.

    Reflecting on the legal battle that began in 2017, Maduka remained hopeful, citing past victories as a sign of positive prospects.

    “I think the worst is over. Most of what could have made our case a bad case has been resolved. We do have a case and we are trusting God; that’s why we won at the National Industrial Court,” he said.

    He also noted the irony of the situation, where the same judge who ruled in their favor was initially scheduled to preside over the appeal. Despite the delay, he maintained confidence in the judiciary, stating, “We are very positive about the judiciary, and it has done well in this regard.”

    It will be recalled that the banking consolidation exercise introduced by the then CBN governor, Prof. Chukwuma Soludo in 2006, significantly transformed the financial sector.

    Several banks that failed to meet the new ₦25 billion capital requirement were forced to shut down, resulting in mass layoffs. Unfortunately, many employees of these non-consolidated banks lost their jobs without receiving any benefits.

  • CBN appoints 16 new directors in major leadership overhaul

    CBN appoints 16 new directors in major leadership overhaul

    The Central Bank of Nigeria (CBN) has appointed 16 new directors across key departments in a significant leadership shakeups. 

    These appointments affect crucial areas such as Monetary Policy department, Trade and Exchange Department, Banking Supervision, Payment Systems and Consumer Protection among others.

    This new appointments are coming at a time when regulators are tightening oversight on banks and financial technology firms as it declared last week as well as the final leg of the banking sector recapitulation exercise.

    A source at the CBN told The Nation that “the very best were selected as such, no one will complain about the process because they all were appointed from within the system.”

    This restructuring signals broader changes at the apex bank.

     With the latest appointments, the CBN is strengthening its focus on compliance, consumer protection, and financial sector stability, especially in the face of increasing fraud risks and regulatory actions and other critical areas.

    One of the most notable appointments is that of Dr. Olubukola Akinwunmi Akinniyi as Director of Banking Supervision. 

    His new role places him at the center of banking oversight, a crucial function as Nigeria’s financial institutions prepare to support President Bola Tinubu’s ambition of building a $1 trillion economy. 

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    Another key change is in payment system supervision. The CBN has split the Payments System Management Department into two distinct units—one focused on policy and the other on supervision. 

    Yusuf Rakiya Opeyemi has been appointed Director of the newly created Payment System Supervision Department, reflecting the CBN’s commitment to tackling rising fraud and ensuring stronger regulatory oversight. 

    Industry stakeholders had criticised the former structure, which housed payment supervision and policy under a single team, as a bottleneck to effective regulation.

    Consumer protection is another area where the CBN is making significant changes. Aisha Isa-Olatinwo has been named Director of Consumer Protection, a department that has faced criticism over unresolved disputes between banks and their customers. 

    With a background in audits, Olatinwo is expected to take a stricter stance on financial institutions that fail to address customer complaints.

    The newly appointed directors include Mal. Abdullahi Hamisu (Banking Services); Dr. OJumu Adenike Olubunmi (Medical Services); Mr. Makinde Kayode Olanrewaju (Procurement & Support Services); Mrs. Jide-Samuel Omoyemen Avbasowamen (Information Technology); Mrs. Sike Rita Ijeoma (Financial Policy and Regulation); Dr. Victor Ugbem Oboh (Monetary Policy); Mr. Nakorji Musa (Trade and Exchange); Dr. Vincent Monsurat Modesola (Strategy Management and Innovation); Mr. Farouk Mujtaba Muhammad (Reserve Management); Dr. Adetona Sikiru Adedeji (Currency Operations and Branch Management); Mr. Hassan Ibrahim Umar (Development and Finance Institutions Supervision); Mr. Solaja Mohammed-Jamiu Olayemi (Other Financial Institutions Supervision) and Dr. Okpanachi Usman Mose (Statistics).

    All the appointments took effect from March 3, 2025. 

    The new leadership team is expected to play a critical role in shaping Nigeria’s financial sector as the CBN enforces stricter regulations and aims for greater efficiency in monetary policy and financial stability.

  • Way forward

    Way forward

    • Both the CBN and senate committee must collaborate on the N30 trillion ways and means probe

    If gold rusts, what shall iron do – that is perhaps a good context to view the

    ongoing brickbats between the apex bank and the nine-member ad-hoc committee probing the N30 trillion ways and means facility granted by the Central Bank of Nigeria (CBN) to the Federal Government between 2015 and 2023.

    Last week, the senate committee chairman, Jibrin Isah, had, while receiving an interim report from its consultants, accused the CBN of failure to provide the necessary documents to facilitate the investigation. Expressing dissatisfaction with the CBN’s lack of transparency, he claimed that his committee had attempted several methods to obtain the required documents but had run into a brick wall. The committee’s efforts to engage CBN officials at various levels, he said, have met with no success. Same, he said, of the efforts of the committee clerk and those of the consultants to retrieve the documents directly from the CBN – including the committee chairman’s visit to the deputy governor who, he claimed, promised to do something.

    None, he noted, has yielded any fruits since the February 27, 2024 inauguration of the committee. “So, let the Nigerian public know that this assignment has been hindered by the Central Bank of Nigeria”, he had let out in frustration.

    The CBN however paints a completely different picture. According to the apex bank’s director of banking services, Hamisu Abdullahi, all requested documents had been submitted via email. “We provided a schedule showing summary of ways and means stating direct ways and means and indirect ways and means. That folder was sent to an email provided by this committee. There was an email provided, we sent, we replied to that email three times,” he said.

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    “…If there were any specific documents that the consultants believed were missing, they should identify them so the CBN could address the issue. We can resend that document as we speak here. So, we have responded that we are not aware of any document requested that we have not provided”, he further stated.

    Surely, both sides couldn’t be right at the same time. In the first place, it is hard to imagine the Yemi Cardoso-led

    CBN playing Jekyll and Hyde with the probe designed to seek answers to the unprecedented abuses under his immediate predecessor.

    We are referring to an era under which the apex bank engaged in the most reckless printing of naira notes while casting away its institutional restraints under a false toga of exigency. For, while the story of the Muhammadu Buhari administration’s borrowing of N30 trillion via the mechanism is already public knowledge, we would have thought that the current apex bank management would, like most Nigerians, only be too eager to put a closure on the transgressions of that era through a swift and unhindered probe.

    It is in the same vein that we consider it unimaginable that the senate committee, together with its bevy of consultants, can be justifiably accused of not understanding their remit. Nothing in their disparate positions appears to suggest irreconcilability; in fact, the problem would seem essentially one of communication which both parties, acting in good faith, can together iron out.

    Now that the CBN has promised to respond to the committee’s demand, we have no reason not to hold the institution to its words. Now, we expect the committee and the consultants to be more forthcoming in terms of what they are looking for, as against what appears to be a blanket or rather an open-ended expedition. Surely, this is what Nigerians expect and this precisely is what public duty demands.

  • CBN moves to tame inflation with new policy measures

    CBN moves to tame inflation with new policy measures

    The battle against spiraling inflation entered a new phase with the Central Bank of Nigeria’s (CBN) plan to adopt inflation targeting framework to price stability. The framework, which is also being implemented by central banks of several African countries, is tipped to boost Nigerians’ purchasing power, disposable income, drive aggregate demand and stimulate production, writes Assistant Editor, Collins Nweze

    Businesses and households continue to feel the impact of inflation surge on daily basis.  Inflation rise always comes with diverse consequences for all operators in the economy, making it a key deciding factor in determining how well people live or cater for their daily needs.

    That explains why price stability is one of the core mandates of the Central Bank of Nigeria (CBN), which is working on adopting and implementing inflation targeting framework to make live better for the citizenry.

    The framework, expected to replace the exchange rate targeting framework, will be implemented with the backing of the people.

    In its efforts to tame inflation, the CBN recently hosted the Monetary Policy Forum 2025, featuring fiscal authorities, legislative, private sector, development partners, subject-matter experts, and scholars with the theme: “Managing the Disinflation Process”.

    The forum is a major push to improve monetary policy communication, foster dialogue, and collaborate on critical issues shaping monetary policy.

    During the event, CBN Governor, Olayemi Cardoso explained that the apex bank’s focus is to sustain price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and ease economic hardship.

    He said the apex bank is continuing its disciplined approach to monetary policy, aimed at curbing inflation and stabilising the economy.

    “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.”

    Cardoso reiterated that the goal of the CBN is to ensure that monetary policy remains forward-looking, adaptive, and resilient.

    In addressing our economic challenges, collaboration is key: “Managing disinflation amidst persistent shocks requires not only robust policies but also coordination between fiscal and monetary authorities to anchor expectations and maintain investor confidence,” Cardoso said.

    “Our focus must remain on price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and ease economic hardship,” he added.

    The CBN also focused on strengthening the banking sector, introducing new minimum capital requirements for banks (effective March 2026) to ensure resilience and position Nigeria’s banking industry for a $1 trillion economy.

    This week, the CBN launched the Nigeria Foreign Exchange Code, marking a decisive step forward for integrity, fairness, transparency and efficiency in our FX market. Built on six core principles, it represents a binding commitment from the financial community to rebuild trust and inspire confidence.

    According to the CBN, financial inclusion also remains a priority. The Women Entrepreneurs Finance (We-FI) initiative under the National Financial Inclusion Strategy is bridging the gender gap, ensuring more women have access to financial services and digital tools.

    Remittances through 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 stated.

    He said moving from the exchange rate targeting framework to the inflation targeting framework aligned with the apex bank’s determination to bring inflation upsurge under control in line with its price stability mandate.

    Inflation uptick has remained a major concern to the CBN and is the time to use monetary policy tools to control it.

    Already, the data from the National Bureau of Statistics (NBS) showed that Inflation Rate in Nigeria increased to 34.80 percent in December from 34.60 percent in November of 2024. Inflation Rate in Nigeria is expected to be 32.00 percent by the end of this quarter, according to Trading Economics global macro models and analysts’ expectations.

    Market data showed that the various oil price shocks, Covid-19 pandemic, and most recently, the war between Russia and Ukraine, have resulted in various shocks to the global economy, requiring changing responses to subdue the monetary and fiscal authorities in the advanced and emerging market economies.

    To address these shocks, the CBN plans to migrate from an exchange rate targeting framework to phased migration and now inflation targeting framework.

    The CBN has been controlling the growth of money supply to achieve price stability, but is seeking a change of strategy to achieve better results.

    Economy remains attractive to investors despite inflation surge

    A member of the Central Bank of Nigeria (CBN)-led Monetary Policy Committee (MPC), Bala Bello, listed key indicators that have overtime, kept domestic and domestic investors attracted to the domestic economy.

    In his personal statement during the last MPC meeting held in Abuja, he said the external reserves position have grown remarkably to $40.88 billion as of 21st November 2024 from $40.06 billion at end-October 2024.

    The upsurge in reserves levels, he said strengthens the needed buffer to mitigate unforeseen risks and reinforces the importance of ongoing efforts at sustaining improved foreign exchange supply.

    Bello said the rising reserves position, alongside the relatively stable exchange rate, would enhance Nigeria’s position as an attractive investment destination.

    He maintained that 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,” he said.

    According the MPC member, this credit played a crucial role in stimulating economic activities and supporting output performance, emphasising the role of financial institutions in the economy.

    He disclosed that the results of stress tests showed that bank’s solvency and liquidity ratios remained resilient in scenarios of potential severe macroeconomic shocks. Continued vigilance is, however, required to ensure that the banking system remains strong and stable amid lingering risks.

    He added that everyone has a role to play in this, and our collective vigilance is crucial for the stability of our financial system.

    Continuing, he said that notwithstanding, Nigeria’s Real Gross Domestic Product (GDP) has maintained a positive trajectory, with a growth rate of 3.46 per cent in the third quarter of 2024, compared with 3.19 and 2.54 per cent in the preceding and corresponding periods, respectively.

    “This growth, driven by both the oil and non-oil sectors, with a notable contribution from the Services sector, is a testament to the resilience of our economy. The non-oil sector grew by 3.37 per cent in the third quarter, compared with 2.80 per cent in the second quarter, while the oil sector grew by 5.17 per cent (year-on-year), compared with 10.15 per cent in the preceding quarter,” he said.

    Another MPC member, Aloysius Ordu, said CBN staff presentations show noteworthy green shoots since the era of tight money began.

    “First, there has been a marked improvement in the current account balance. Q3 2024 data shows a surplus of US$6.29 billion vis-à-vis US$5.14 billion in Q2 2024; and the overall balance of payment position recorded a surplus of US$3.79 billion,” he said.

    “Second, the external reserves stood at US$40.88 billion at end-October 2024, a remarkable 16.9 months of import cover. The exchange rate remained relatively stable for most of the second half of 2024, reflecting increased capital inflows on account of attractive yields,” he added.

    On his part, another member of MPC, Bandele Amoo, said Nigeria’s Balance of Payments (BOP) position remained stable to support our external sector stability.

    The BOP provisionally recorded a surplus in the 3rd Quarter of 2024 driven by positive balances in the current account and net asset acquisition positions.

    The overall account positively stood at US$3.79 billion as at Q3 of 2024. Meanwhile, portfolio inflows remain high, recording a net inflow US$0.59 billion as at November 2024.

    “The total foreign exchange flows through the economy stood at US$6,175 billion in September 2024 compared with $2,570.6 billion in August 2024. Furthermore, foreign reserves at the end of October 2024 stood at $39.68 billion, equivalent to several months of import cover.

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    “External reserves is projected to further increase by year end due to expected reduction in import demand pressures arising from the full deregulation of the downstream oil sector, reduced petroleum products importation regime, increased inflows and other process management by the CBN,” he said.

    Global inflation statistics

    Earlier, Cardoso global inflation is projected to decline to 3.5 percent in 2025, down from its peak of 9.4 percent in 2022.

    Speaking during the last Chartered Institute of Bankers of Nigeria (CIBN) Bankers Dinner in Lagos, he said major central banks are gradually easing their monetary conditions and this shift is slowly reopening access to international capital markets for emerging economies. However, global growth remains subdued at 2.6 percent, hindered by geopolitical tensions, China’s economic slowdown, and growing trade fragmentation.

    He said the Sub-Saharan Africa has seen modest growth of 3.6 per cent last year, while still lagging pre-pandemic levels.

    “The effects of monetary tightening measures have helped to curb inflation in some key markets such as South Africa and Kenya but many countries are still grappling with double-digit inflation rates and high debt service burdens. These challenges constrain the resources available for critical investment in education, healthcare and infrastructure,” he said.

    While food prices remain a key contributor to the uptick, the Monetary Policy Committee members recently commended the efforts of the Federal Government for the improved security, especially in the North-East of the country, which would likely improve food production.

    The committee members also noted the role of rising energy prices on the general price level due to its impact on factors of production. The recent increase in the price of Premium Motor Spirit (PMS) has also impacted the cost of production and distribution of food items and manufactured goods.

    The committee members were optimistic that the full deregulation of the downstream sub-sector of the petroleum industry would eliminate scarcity and stabilise price levels in the short to medium term.

    They reiterated the need to strongly forge ahead with the deepening collaboration between the monetary and fiscal authorities to ensure the achievement of our synchronised objectives of price stability and sustainable growth.

  • The CBN’s new Monetary Policy Rate

    The CBN’s new Monetary Policy Rate

    The Central Bank of Nigeria (CBN), at the 298th meeting of the Monetary Policy Committee (MPC) announced a significant yet nuanced rise in the Monetary Policy Rate (MPR) by 25 basis points, elevating it from 27.25% to 27.50%.
    At the heart of the MPC’s decision is a relentless and concerning rise in inflation. The headline inflation rate in Nigeria soared to an alarming 33.88% in October, rising from 32.70% in September. Food inflation, a particularly pressing issue, ascended even higher to 39.16%, while core inflation increased to 28.37%. These figures illustrate the severity of price pressures eroding purchasing power and exacerbating economic inequality across the nation.
    The MPC attributed the rising inflation to multiple factors, including escalating energy costs, notably the recent hike in Premium Motor Spirit (PMS) prices. This increase in fuel prices has elevated production and distribution costs, which are then passed down to consumers in the form of higher prices for goods and services.
    The decision to raise the MPR aims to tighten liquidity in the economy, curb excessive spending, and theoretically ease inflation.
    However, a pressing question remains: does this approach adequately address the structural roots of inflation, particularly those linked to supply-side constraints such as food production inefficiencies and rising energy costs?
    Amidst these inflationary challenges, Nigeria’s economy has shown remarkable resilience, reporting a 3.46% year-on-year GDP growth in the third quarter of 2024. The growth figures suggest that the economy is gradually bouncing back from the multiple shocks inflicted by the COVID-19 pandemic and prior recessions. Encouragingly, both the oil and non-oil sectors have contributed to this growth. The non-oil sector expanded by 3.37%, buoyed by increased agricultural productivity and a robust services sector. Meanwhile, the oil sector demonstrated growth of 5.17%, although this marks a deceleration compared to previous quarters.
    This economic growth offers a sense of reassurance, indicating that recovery is on the horizon. However, sustaining this momentum will require navigating numerous obstacles, such as exchange rate volatility, a tighter monetary environment, and the ongoing issues of insecurity that have plagued various regions of the country.

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    The decision to raise the MPR to 27.50% reiterates the CBN’s commitment to combating inflation. However, the ripple effects of such a move warrant careful consideration. Higher interest rates inherently translate to increased borrowing costs for businesses and individuals. For a private sector already grappling with high operational costs coupled with sluggish consumer demand, these elevated borrowing costs could stifle growth and worsen unemployment figures.
    On the other hand, a tighter monetary policy could attract foreign investors seeking higher yields, potentially boosting capital inflows and, in turn, supporting the naira. This scenario highlights the delicate balance the CBN must maintain: tightening monetary policy enough to anchor inflation expectations without suffocating economic growth is a significant challenge.
    While monetary policy serves as a crucial tool for managing economic challenges, it is essential to recognize that Nigeria’s economic problems are deeply rooted in structural issues that cannot be adequately addressed through monetary tightening alone. For example, the issue of food inflation exemplifies a challenge that is not solely a monetary phenomenon; rather, it relates to numerous systemic inefficiencies, including challenges in agricultural value chains, insufficient storage facilities, and inadequate infrastructure.
    Moreover, the recent increases in energy prices, though deemed necessary for deregulation, underscore the urgent need for comprehensive reforms within the energy sector. Addressing these structural challenges requires substantial investment in renewable energy sources, enhancing refining capacity, and developing efficient distribution systems. The transition to more sustainable energy options is crucial to reducing dependency on fossil fuels and mitigating the adverse effects that price hikes have on ordinary citizens.
    As Nigeria navigates its economic landscape, it is imperative that policymakers adopt a comprehensive strategy that goes beyond monetary measures. Addressing inflation and fostering growth will require coordinated efforts across various sectors. Structural reforms in agriculture, energy, and infrastructure must be prioritized to tackle the persistent challenges that lie ahead.
    Furthermore, enhancing public investment in key areas, such as education and healthcare, can foster human capital development, which is essential for long-term economic stability and growth. Engaging the private sector in these initiatives through public-private partnerships can also help mitigate financial constraints and stimulate economic activity.
    By balancing monetary policy with strategic investments and comprehensive reforms, Nigeria can work towards a sustainable and equitable economic future that benefits all its citizens.
    •Isah Aliyu Chiroma,aliyuisahchiroma29@gmail.com

  • Money supply rises to N108.95 trillion

    Money supply rises to N108.95 trillion

    Currency-in-circulation crosses N4tr

    The Central Bank of Nigeria (CBN) data have shown significant rise in broad money supply (M3) by 62.8 per cent year-on-year to N108.9 trillion, just as currency-in-circulation surged to N4.31 trillion.

    The rise in these indicators, have equally caused a significant upbeat in Credit to Private Sector (CPS).

    Cordros Securities Analysts, said: “We project the CPS will maintain a double-digit expansion in 2024 fiscal year as we believe the re-enforcement of the CBN’s limit on the loans-to-deposits macro-prudential ratio for deposit money banks (DMBs) will continue to drive the willingness of commercial banks to create risky assets. Nonetheless, we acknowledge that the increased monetary policy tightening measures may tether CPS growth.”

     According to data from the CBN, CPS increased by 27.5 per cent year-on-year to N75.85 trillion in September as against N59.51 trillion recorded in the same period of last year.

    “We believe the continuous increase in CPS reflects the impact of CBN’s enforcement of the 50.0 per cent loan-to-deposit ratio and the spillover effects of the naira depreciation on foreign-denominated assets of the banks.

    “On a month-on-month basis, the CPS rose by 1.7 in September (August: -1.0 per cent m/m to N74.73 trillion). Similarly, Credit to the Government surged to a record high of N42.02 trillion in September, representing an 89.8 per cent year-on-year increase relative to the N22.14 trillion in September 2023, indicating increased reliance on domestic banks for deficit financing”.

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    Based on the data obtained from FMDQ, total inflows into the Nigerian Autonomous Foreign Exchange Market (NAFEM) rose to a five-month high in October, increasing by 40.2 per cent m/m to $3.04 billion in October compared with $2.17 billion in September last year.

    The analysts attributed the improvement primarily to a substantial increase in inflows from foreign sources (44.6 per cent of total inflows).

    In comparison, collections from local sources (55.4 per cent of total inflows) dropped for the second consecutive month. Specifically, inflows from foreign sources increased by 292.7 per cent m/m to $1.37 billion compared with $345.50 million recorded in September last year, reflecting the highest level in seven months in line with improved carry trade opportunities in the capital market over the review period.

    As a result, higher accretions were recorded across the Foreign Portfolio Investment (+510.9 per cent m/m) and Foreign Direct Investment (+44.6 per cent m/m) segments, while inflows from other corporate segment (-15.1 per cent m/m) dropped.

     “Elsewhere, inflows from local sources declined by 7.5 per cent m/m to $1.69 billion in October as against $1.82 billion in September last year, driven by declines across collections from the individuals (-30.6 per cent m/m), CBN (-14.3 per cent m/m), and non-bank corporates (-8.6 per cent m/m) segments, amid a marginal improvement in the exporters/importers (+0.6 per cent m/m) segment,” the report said.

    “While we acknowledge the recent liquidity influx from foreign investors, we believe this is unlikely to be sustained given the unfavourable macroeconomic conditions, still weak structure of the Nigerian FX market, and sustained volatility in the naira”.

    “Additionally, we anticipate that the limited inflows from the CBN may pose downside risks to overall liquidity conditions in the near term, potentially dampening market confidence and heightening pressure on the naira,” the report said.

    In the Treasury bills secondary market, demand pressures eased on the last trading day, undermining the four consecutive days of bullish sentiments posted last week.

    As a result, the Treasury bills secondary market closed bearish week-on-week, as the average yield across all instruments increased by nine basis points (bps) to 25.9 per cent.

    Across the market segments, the average yield advanced by four basis points to 24.2 per cent in the Nigeria Treasury Bills segment and increased by 11bps to 26.2 per cent in the Open Market Operation segment.