The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has advocated for enhanced economic collaboration between Nigeria and the Middle East, emphasizing the importance of infrastructural development, tourism, and diaspora engagement.
Speaking at a meeting with Talal Al-Humond, Assistant Governor for Monetary Affairs at the Saudi Central Bank (SAMA), on the sidelines of the inaugural Conference on Emerging Markets Economies in Riyadh, Mr. Cardoso highlighted Saudi Arabia’s strides in economic diversification. He noted that Nigeria could draw valuable lessons from the country’s investment in large-scale infrastructure, environmental sustainability, and tourism.
He also reiterated his commitment to working with the Nigerian diaspora in the Middle East to boost remittance flows and strengthen Nigeria’s financial sector. He assured that the CBN would continue implementing policies aimed at improving macroeconomic stability, fostering private sector growth, and creating high-quality jobs for Nigerians.
In response, Mr. Talal Al-Humond affirmed Saudi Arabia’s willingness to collaborate with Nigeria to achieve shared economic goals.
Financial Market Reforms and Economic Stability
During a panel discussion moderated by Jihad Azour, Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF), Mr. Cardoso discussed key financial market reforms in Nigeria. He pointed out that past distortions in the foreign exchange market had resulted in a significant disparity of up to 60% between official and parallel exchange rates. However, he noted that due to consistent policy measures and improved transparency, the gap had narrowed to approximately 4-5%.
He highlighted the adoption of an electronic matching system to enhance forex market transparency and the introduction of a foreign exchange code of ethics signed by all Nigerian banks. As a result, he reported that Nigeria’s foreign reserves had exceeded $40 billion, reaching their highest level in nearly three years.
Mr. Cardoso acknowledged that Nigeria had faced economic challenges such as capital outflows, currency depreciation, inflation, and a backlog of foreign exchange transactions. He noted that upon assuming office, his administration prioritized restoring confidence in the market by addressing these issues and committing to economic stability.
Monetary Policy and Fiscal Reforms
Governor Cardoso emphasized Nigeria’s tight monetary policy stance to combat inflation and restore macroeconomic discipline. Over the past year, the CBN raised interest rates by 850 basis points and phased out quasi-fiscal interventions that had previously distorted the economy. He underscored the bank’s reliance on orthodox monetary policies, which have been consistently communicated to market participants.
He also highlighted the removal of Nigeria’s fuel subsidy, which, along with inefficiencies in the foreign exchange system, had cost the country nearly 6% of its Gross Domestic Product (GDP) annually. While acknowledging the political challenges associated with the subsidy’s removal, he noted its positive impact on Nigeria’s fiscal position.
On financial sector reforms, Mr. Cardoso stated that the CBN had mandated bank recapitalization efforts to strengthen the financial system and build resilience against economic shocks. He reported that these measures had already contributed to a more robust banking sector.
Enhancing Financial Inclusion and Digitalisation
Discussing financial inclusion, the Governor emphasized the role of digitalisation and financial technology in expanding economic access. He pointed out that Nigeria’s financial inclusion rate currently stands at 74%, with efforts underway to further improve access, particularly for underserved populations.
He stressed that leveraging mobile money services, advancing technological solutions, and implementing gender-focused initiatives would play a crucial role in bridging the financial access gap. He reaffirmed the CBN’s commitment to maintaining macroeconomic stability, ensuring policy consistency, and fostering long-term resilience in the Nigerian economy.
Governor Cardoso concluded by emphasizing the need for tailored economic policies that align with Nigeria’s unique economic realities, ensuring sustainable growth and financial inclusion for all citizens.
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