Olayemi Cardoso, the governor of the Central Bank of Nigeria (CBN), has questioned the region’s growing economic ties to the Middle East and the country’s diaspora community.
According to Cardoso, who spoke during a meeting with Talal Al-Humond, the Assistant Governor for Monetary Affairs of Saudi Arabia Central Bank (SAMA), the Ministry of Finance, Saudi Arabia, and the Regional Office of the International Monetary Fund (IMF) in Riyadh, there are lessons to be learned from Saudi Arabia in terms of infrastructural development and tourism.
According to him, Saudi Arabia’s dedication to diversifying its economy through innovative environmental projects, large-scale transformation, and tourism investment is essential for development.
Read more about the CBN policy, which is mutually beneficial to banks and customers.
Cardoso also reiterated his commitment to working with the Middle Eastern Diaspora community to boost remittance flows and strengthen Nigeria’s financial sector.
He stated that the CBN will continue to strengthen macroeconomic fundamentals to foster a favorable environment that would encourage the development of high-quality jobs and the private sector.
Talal Al-Humond assured Cardoso that the Saudi Central Bank would work with the CBN to accomplish mutually beneficial goals.
Meanwhile, during a panel discussion moderated by the Director, Middle East and Central Asia Department, IMF, Jihad Azour, at the conference, Cardoso cited reforms in the financial markets that addressed distortions in the Nigerian foreign exchange market, which had previously experienced a gap of up to 60% between the official and parallel market exchange rates.
He noted that due to consistent policy direction, improved market confidence, and enhanced transparency in forex trading, the gap has significantly narrowed to approximately 4-5%.
Additionally, Governor Cardoso cited the introduction of a foreign exchange code of ethics and the introduction of an electronic matching system to improve market transparency. As a result of these measures, he reported that the country’s foreign reserves had exceeded $40 billion, marking the highest level in nearly three years.
He acknowledged that Nigeria had faced significant economic challenges, including capital flow exits, multiple exchange rate regimes, currency depreciation, high inflation, and a backlog of foreign exchange transactions, which led to a loss of confidence in the country’s currency.
He stated that his team put a priority on restoring market confidence by reducing the volume of foreign exchange transactions and demonstrating a commitment to economic stability when they took office.
To combat inflation and restore macroeconomic discipline, Cardoso emphasized that Nigeria had a tight monetary policy stance. He explained that the Bank switched away from quasi-fiscal interventions, which had distorted the economy, and that the Bank had increased interest rates by 850 basis points over the past year.
He emphasized that market participants were consistently informed that Nigeria’s strategy had remained firmly rooted in conventional monetary policies.
Another significant reform, he noted, was the removal of the fuel subsidy, which, along with multiple exchange rate inefficiencies, had cost the country approximately 6% of its Gross Domestic Product (GDP) annually.
He acknowledged that previous governments had lacked the political will to end the subsidy, but its elimination has had a significant positive effect on Nigeria’s fiscal outlook.
He cited the CBN’s recommendation to recapitalize banks in order to strengthen the financial system and create buffers to withstand unforeseen economic shocks. He noted that the sector’s support has already been demonstrated by these measures.
He emphasized the importance of tailoring policy decisions to each economy’s unique needs in an effort to address the global economic climate. He described how, despite international trends, Nigeria continued to enact monetary policy.
He noted that despite his initial reservations, many financial experts and international colleagues recognized that Nigeria had made the right decisions in light of its particular economic circumstances a year later.
The Governor made reference to Nigeria’s experience, where the rate of financial inclusion is currently 74%, and discussed the steps needed to increase financial inclusion and the role of digitalization and financial technology in reducing potential risks. He emphasized the urgent need to intensify this to ensure that all social groups benefit from economic growth. As the economy rebounds, he emphasised reducing disparities and ensuring broad-based financial access.
He argued that expanding mobile money services, utilizing technology, and placing gender-focused initiatives prioritizing the positive economic effects of empowering women across the African continent would significantly close the financial access gap, especially for underserved populations, while citing digitalization as a key driver for advancing financial inclusion.
He reaffirmed the CBN’s commitment to maintaining macroeconomic stability, sustaining policy consistency, and ensuring long-term resilience for the Nigerian economy.
Source: Channels TV
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