Governor of the Central Bank of Nigeria (CBN), Mr. Olawale Cardoso, emphasized the central bank’s commitment to ongoing bold reforms aimed at making the economy beneficial for all Nigerians.
He delivered these remarks at the 2024 Annual Vanguard Economic Discourse held in Lagos, themed “Reform in an Era of Global Economic Uncertainty: Whither Nigeria.”
Cardoso highlighted that the recent measures introduced by the CBN are already showing positive outcomes. He addressed the complexities and trade-offs policymakers worldwide face due to global economic turbulence, referring to the current period as a “vocal era” characterized by volatility, uncertainty, and persistent shocks affecting the global and regional economy.
He pointed to the elevated level of global uncertainty, as measured by the World Uncertainty Index, noting that recent shocks have established a new norm of turbulence. These shocks, driven by political fragmentation and other factors, have significantly impacted economic growth.
The International Monetary Fund (IMF) projected a global growth rate of around 3.2%, but warned of risks such as tight financial conditions, supply chain disruptions, geopolitical tensions, and economic fragmentation.
Cardoso explained that the tightening of financial markets globally, driven by efforts to control inflation, has affected developing economies like Nigeria by causing capital flight to safer investments.
Additionally, conflicts such as those in the Middle East and between Russia and Ukraine have disrupted energy and financial markets, as well as global trade, resulting in economic slowdowns and inflationary pressures.
Protectionist measures taken by governments during the COVID-19 pandemic have also contributed to global trade uncertainties. Rising global debt levels, particularly in developing countries struggling with debt repayments, further exacerbate economic uncertainty.
Domestically, Nigeria faces challenges such as high inflation driven by food costs, transportation expenses, infrastructure issues, and security concerns in food-producing areas.
Volatility in the foreign exchange market, caused by market distortions and reduced foreign exchange supply, has led to speculative activities impacting the naira’s value. Cardoso also emphasized the need to strengthen the banking sector’s capacity to support Nigeria’s envisioned trillion-dollar economy.
Cardoso stressed the importance of appropriate focus and unwavering reforms to address these uncertainties. As the CBN Governor, he is committed to repositioning the bank to provide sustainable, data-driven solutions that positively impact Nigerians’ livelihoods.
He called for collaboration between monetary and fiscal authorities and acknowledged Vanguard Newspaper’s role in facilitating important economic discussions.
Cardoso reiterated the CBN’s dedication to implementing bold reforms, citing recent successes in reducing inflation and enhancing the transparency and stability of the foreign exchange market.
The bank’s efforts to settle valid FX forwards have improved stakeholder confidence, with FX inflows in Q1 2024 exceeding total inflows for 2023. Reforms in the Bureau de Change (BDC) segment aim to ensure proper regulatory compliance and enhance foreign exchange market operations.
The CBN is also focused on increasing diaspora remittances through official channels and recently licensed 14 new international money transfer operators to boost competition and efficiency in the foreign exchange market. These efforts are intended to achieve a transparent and functional FX market and stabilize the naira.
In the banking sector, the CBN is implementing reforms to increase capital requirements for banks, improve financial system stability, and support the trillion-dollar economy goal. Enhanced corporate governance guidelines will ensure ethical and professional practices within banks.
Cardoso highlighted positive outcomes from these reforms, such as improvements in Nigeria’s foreign credit rating and commendations from the World Bank and other multilateral institutions.
He assured that the CBN will continue to pursue its reform program to achieve sustained and inclusive economic growth, working closely with other regulators and fiscal authorities. The bank is committed to promoting monetary and price stability in Nigeria and will consider all deliberations to enhance its efforts.
