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Amid multiple economic crises, the Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has reaffirmed his commitment to strengthening the country’s apex bank. His goal is to create a resilient institution capable of addressing the nation’s challenges effectively.
Speaking at the closing dinner of the 30th Nigeria Economic Summit (#NES30), Cardoso outlined the significant hurdles he faces and the strategies he has employed to overcome them. He emphasized that his team is dedicated to taming inflation, a goal he described as essential to the nation’s economic stability.
Excerpts from the Interview:
Taming Inflation is Crucial
Cardoso explained that while monetary policy is crucial for stabilizing the economy, it cannot substitute for addressing the underlying economic fundamentals. “Taming inflation is key,” he said, stressing that high inflation discourages investment, reduces purchasing power, and negatively impacts businesses by limiting consumer spending.
According to Cardoso, controlling inflation is essential for economic recovery: “As inflation begins to moderate, interest rates will likely start to fall, making it easier for the productive sectors of the economy to operate. That is the trend we expect in the coming years.”
Navigating Early Challenges
Reflecting on the challenges he encountered upon taking office, Cardoso described the economic landscape as “very challenging.” A year ago, inflation was escalating, foreign currency shortages exceeded $7 billion, and international companies were exiting due to difficulties accessing foreign exchange. Multiple exchange rates compounded the situation, eroding confidence in the Naira and accelerating its depreciation.
Cardoso also highlighted that the Central Bank had been involved in numerous ventures outside its core mandate, such as price stability and exchange rate management. One of his immediate tasks was to refocus the bank on these critical areas.
Positive Ratings
Cardoso pointed to improved international ratings as a sign of progress. “Two out of three rating agencies have changed Nigeria’s rating to positive,” he said. International financial institutions and banks now view both the CBN and Nigeria’s economic outlook more favorably, which Cardoso attributes to the bank’s efforts in rebuilding confidence and trust.
Addressing the Foreign Exchange Backlog
One of the immediate issues Cardoso faced was a significant backlog in foreign exchange claims. “We had to give confidence to international investors that the Central Bank would meet its obligations,” he stated. The bank is currently in the second phase of verifying claims and is working to ensure that all legitimate claims are settled.
Maintaining Vigilance and Stability
Cardoso emphasized the importance of vigilance, stating that economic conditions are constantly evolving. “We must remain vigilant because any misstep can have a major impact on the economy.” The CBN’s primary focus continues to be stabilizing the macroeconomic environment and managing inflation in a way that benefits the broader population.
He also acknowledged the difficult decisions made at the last Monetary Policy Committee (MPC) meeting, where the decision to raise interest rates was necessary despite short-term discomfort. The move, according to Cardoso, was essential to maintain economic stability.
Avoiding Excessive Interventions
Cardoso made it clear that the Central Bank is stepping away from excessive interventions in the economy, which have persisted for several years and contributed to the current challenges. “We are focused on using orthodox monetary tools to manage inflation and stabilize prices,” he said, adding that interventions should be left to Development Finance Institutions (DFIs), with the CBN playing a supportive role.
IMTOs and Remittances
Cardoso highlighted the bank’s recent focus on International Money Transfer Operators (IMTOs) as a vital source of foreign exchange. Following extensive engagements with IMTOs, remittances increased from around $200 million to almost $600 million by the end of last month. This, according to Cardoso, underscores the importance of persistence in achieving financial goals.
Economic Fundamentals Must be Right
Cardoso stressed that there is no substitute for getting the fundamentals of the economy right. “We must ensure that the engines and levers of the economy are running efficiently,” he said, emphasizing the need to balance demand and supply while diversifying the economy away from its dependence on oil.
The Push for Economic Diversification
He reiterated the importance of economic diversification, stating, “The opportunity to diversify the economy continues to exist, and it is something we must remain committed to.” Cardoso believes that all stakeholders must work together to ensure that Nigeria takes full advantage of its economic potential.
Advancing Women’s Roles
Cardoso also touched on his commitment to advancing the role of women in Nigeria’s economy. “I made a commitment during my Senate screening to advocate for the empowerment of women,” he said, noting that women play a critical role in the workforce, particularly in Nigeria and other parts of Africa. He emphasized the importance of investing in women’s empowerment both within the Central Bank and in the broader economy.
Transparency and Communication
One of Cardoso’s key initiatives has been to enhance transparency within the Central Bank. “We are making our operations more open,” he said, noting that after every MPC meeting, the press is invited to ask questions, which the bank answers openly. In addition, the CBN’s website is undergoing a major overhaul to improve transparency and communication with the public.
Cardoso concluded by emphasizing that the Central Bank’s efforts are driven by ongoing dialogue with stakeholders and a deep understanding of the issues affecting the Nigerian economy. He remains committed to ensuring that the CBN addresses the nation’s challenges while building a more resilient and efficient financial system.
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