Olayemi Cardoso, Governor of the Central Bank of Nigeria, has encouraged Nigerians of better days ahead, while also declaring that projected stability will propel Nigeria’s economy to $1 trillion by 2030. Cardoso described the CBN’s mandate and presented a detailed review of Nigeria’s economic performance, recent policy initiatives, and projection for the balance of 2024.
Cardoso gave a presentation to the Senate Committee on Banking, Insurance, and Other Financial Institutions in Abuja on Friday about the Bank’s 2024 first half-year assessment. Cardoso explained that since taking over in October 2023, the Bank’s administration has focused on stabilising the economy, restoring trust in financial markets, and laying the groundwork for long-term growth.
According to him, the resilience of Nigeria’s economy in the first half of 2024 resulted in a growth rate of 2.98% in the first quarter, up from 2.31% in the same period previous year. He underlined that the Services Sector was the key economic driver, accounting for 58.04% of GDP and growing at a rate of 4.32%.
He also stated that the industrial sector had improved, with a growth rate of 2.19%.Regarding the continued inflationary pressures, with headline inflation climbing from 29.90% in January to 34.19% in June 2024, he stated that the rate of monthly increases had decreased, indicating the success of the Bank’s anti-inflationary actions. He stated, “The spread between official and BDC rates has narrowed significantly from N162.62 in January to N47.22 in June 2024, indicating successful price discovery, increased market efficiency, and fewer arbitrage opportunities.”
“The stock of externalreserves increased toUS$36.89 billion as of July 16, 2024, comparedwith US$33.22billion at end-December 2023, driven largely by receipts from crude oil related taxes and third-partyreceipts.”
In Q1 2024, we maintained a current account surplus and observed improvements in our trade balance.”Our foreign reserves as of the end of June 2024 can cover more than 11 months of imports of goods and services, or 14 months of goods only.
This is much greater than the prescribed international threshold of 3.0 months, demonstrating a robust buffer against external shocks. The banking system remains strong and diverse, with 26 commercial banks, six merchant banks, and four non-interest banks. Key measures such as capital adequacy, liquidity, and non-performing loan ratios all improved significantly, demonstrating the sector’s increasing stability and resilience.
“The equity market has performed admirably, with the All-Share Index rising by 33.81 percent and market capitalization increasing by 38.33 percent from December 2023 to June 2024, reflecting growing investor confidence.”
“While we are encouraged bythese positive trends, the CBN remainsvigilant and committed toimplementing policies that support sustainable growth in our financialmarkets, while maintainingoverall economic stability” Cardoso, who informed members of the committee that necessary actions and plans had been developed to address growing issues, stated, “To combat inflation, we have implemented a comprehensive set of monetary policy measures.”
These include increasing the policy rate by 750 basis points to 26.25 percent, boosting Cash Reserve Ratios, normalising Open Market Operations as our principal liquidity management instrument, and implementing Inflation Targeting as our new monetary policy framework.
“In terms of banking supervision, the CBN has taken decisive steps to ensure the banking industry’s safety, soundness, and resilience. ”
Key steps include intervention in three banks, the termination of Heritage Bank’s licence, increased minimum capital requirements, and improved AML/CFT supervision.
“We also implemented new guidelines for cash reserve requirements and cybersecurity, as well as prohibiting the use of foreign currency collateral for local currency loans. “We are now evaluating the Bank’s micro and macroprudential rules to strengthen the resilience of Nigerian financial institutions to endure tightening conditions, hence establishing a secure and attractive investment climate.
“We have announced efforts to recapitalize Nigerian deposit money institutions in order to address capital deficiency and their ability to boost the economy. “Our ultimate goal is to create a more stable, resilient, and efficient financial system that can better serve the Nigerian economy, while adhering to international best practices.” Earlier in his introductory remarks, the Chairman of the Committee, Senator Adetokunbo Abiru, noted that the overarching purpose of the engagement “is to update the committee on efforts, activities, objectives, and plans of the Bank with respect to monetary policy”
