Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), has said that the bank’s recapitalisation policy has prompted banks to strengthen their financial positions, a process that will result in a more robust and resilient banking sector by March 2026.
He disclosed this while addressing the House of Representatives Committee on Banking on policy measures and strategies to address domestic macroeconomic challenges.
He said the exercise is expected to support the realisation of the US$1 trillion economy by 2030.
The apex bank’s governor said the CBN has taken decisive actions to ensure the safety, soundness, and resilience of the banking industry. “One of the key measures includes the recapitalisation of the banking sector by raising the minimum capital base to support the $1 trillion economy envisioned by the Federal Government of Nigeria (FGN) by 2030.
“Banks are required to meet these new thresholds by March 31, 2026, with several options available for reaching these targets.
“These options include issuing new equities, engaging in mergers and acquisitions, or adjusting their operational licenses. The Bank also revoked the licence of Heritage Bank, facilitated the successful merger of Unity Bank and Providus Bank, revised Cybersecurity Rules for Banks and PSPs, suspension of processing fees on cash deposits, and enhanced AML/CFT supervision, amongst others.”
On the macroeconomic performance in 2024, he said projections indicate a growth rate of 3.2% and 3.3% for 2024 and 2025 respectively adding that Nigeria is projected to maintain a more robust 4.3% growth rate.
Cardoso informed that the non-oil sector maintained strong performance, contributing 94.30% to GDP with a steady 2.80% growth rate saying the oil sector’s growth rate has almost doubled to 10.15% in Q2, 2024 from 5.70% in Q1, 2024, due mainly to improved security surveillance which resulted in increased production of crude oil and natural gas.
He said the Services sector continues to be the primary economic driver, contributing 58.76% to GDP with a robust growth rate of 3.79% adding that the Industrial sector has shown remarkable improvement, with its growth rate surging to 3.53% from 0.31%.
He pointed out that the contribution of agriculture to total GDP also increased. In addition, the growth rate of the sector rose to 1.41%, from a negative territory of -0.90%, indicating a substantial turnaround in productivity.
He also said the foreign exchange reserves have grown significantly, with remittance flows currently representing 9.4 per cent of total external reserves adding that the reserves rose by 12.74% to US$39.12 billion as of October 11, 2024, from US$34.70 billion at end-June 2024, driven largely by foreign capital inflows, receipts from crude oil-related taxes and third-party. “In Q2 2024, we maintained a current account surplus and saw remarkable improvements in our trade balance”, he said.
Cardoso added that the current external reserve position can finance over 12 months of import of goods and services, or 15 months of goods only. “This is substantially higher than the prescribed international benchmark of 3.0 months, reflecting a robust buffer against external shocks”.
He said inflation trended upward, driven largely by high food prices, cost of energy and legacy infrastructural challenges, but it commenced deceleration from 34.19% in June 2024 to 33.40% in July 2024.
“In addition, we have adopted an Inflation-Targeting (IT) monetary policy framework as part of the Bank’s Enterprise Strategy (2024 2028). The IT framework, widely adopted across various global economies, is renowned for its effectiveness in combating persistent inflation.
“These integrated measures are aimed at stabilizing prices, optimizing liquidity management, and engendering an effective monetary policy framework.
“Regarding the foreign exchange market, the bank implemented various reforms including a unification strategy, which streamlined various exchange rate windows into a single model, adopting the ‘Willing Buyer, Willing Seller’ approach to enhance FX liquidity and financial market stability.
“This move was aimed at fostering transparency, reducing market distortions, and enhancing the efficiency of foreign exchange allocations. This consolidation involved the implementation of new operational guidelines, which included removing the International Money Transfer Operators (IMTOS) quote cap.
“Additionally, the bank resumed the sales of FX at the NAFEM and Bureau De Change (BDC) segments, bolstered by an improved supply from Foreign Portfolio Investors (FPIs).”
On Monetary and fiscal policy coordination, he said they had strengthened collaboration during the period under review.
“In this regard, several joint committees have been instituted to build synergy and to provide platforms for key stakeholders’ engagements to explore ways through which monetary policy implementation and fiscal operations can be conducted in a mutually reinforcing manner.
“Overall, our policy measures reflect a holistic approach to addressing various challenges in the economy. While some measures have immediate effects, others are designed to bring about long-term structural changes. Our ultimate goal is to create a more stable, resilient, and efficient monetary and financial system that can better serve the Nigerian economy while adhering to global best practices,”
“In the foreign exchange market, we have achieved increased transparency and improved overall supply. By allowing the foreign exchange rate to be determined by market demand and supply, the CBN has reduced arbitrage and speculative activities and eliminated the front-loading of FX demand.
In his reaction, the Chairman of the committee, Bello El-Rufai commended the CBN governor for his relentless efforts in implementing policies aimed at stabilising the economy.
He said, “Under your one-year stewardship, the CBN has implemented a series of ground-breaking measures aimed at enhancing market transparency, improving financial stability, fostering a more secure investment environment, and shifting towards a market-driven exchange rate regime, to restore confidence and stabilize the economy”.
“On the exchange rate, I must commend the CBN on the unification of the foreign exchange market, enhancing liquidity and reducing market distortions, daring a $7 billion backlog of valid forex, reducing forex volatility, and increasing our external reserves significantly,” he said.
