Nigeria’s foreign reserves have surpassed the $40 billion mark for the first time in nearly three years, marking a significant milestone in the country’s economic recovery efforts.
The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, made this disclosure during a high-level meeting with Talal Al-Humond, Assistant Governor for Monetary Affairs at the Saudi Arabian Central Bank (SAMA), on the sidelines of the just-concluded inaugural Conference on Emerging Market Economies in Riyadh.
According to a statement from the CBN on Monday, “Governor Cardoso reported that the country’s foreign reserves had exceeded $40 billion, marking the highest level in nearly three years.”
Cardoso attributed the rise in foreign reserves to key reforms introduced by the apex bank. These include the adoption of an electronic matching system to enhance transparency in the foreign exchange market and the introduction of a foreign exchange code of ethics.
The code, which all Nigerian banks have signed, aims to ensure strict adherence to market rules, thereby fostering confidence among investors and market participants.
“He also highlighted the adoption of an electronic matching system to improve transparency in the market and the introduction of a foreign exchange code of ethics, which all Nigerian banks signed to ensure adherence to market rules. As a result of these measures”, the statement said
At the conference, which was organized by the Saudi Ministry of Finance and the International Monetary Fund (IMF) Regional Office, Cardoso advocated for stronger economic ties between Nigeria and the Middle East.
He noted that Nigeria could learn valuable lessons from Saudi Arabia’s approach to infrastructural development, economic diversification, and tourism investment.
As part of efforts to boost Nigeria’s economic position, the CBN Governor reaffirmed his commitment to working closely with the Nigerian diaspora community in the Middle East. He stressed that increased remittance flows from Nigerians abroad would play a crucial role in strengthening the country’s financial sector.
According to Cardoso, “the CBN will continue implementing policies that enhance macroeconomic stability, promote private sector growth, and create high-quality jobs.”
He also noted Saudi Arabia’s economic transformation efforts, particularly its investments in environmental sustainability and large-scale economic projects, as areas from which Nigeria could draw inspiration.
In response, Mr. Talal Al-Humond assured Cardoso that the Saudi Arabian Central Bank was open to collaboration with the CBN to achieve mutually beneficial economic objectives.
During a panel discussion moderated by Jihad Azour, Director of the Middle East and Central Asia Department at the IMF, Governor Cardoso addressed critical reforms in Nigeria’s financial markets. He highlighted that Nigeria had previously experienced a significant gap—sometimes as wide as 60%—between the official and parallel market exchange rates.
However, he noted that due to consistent policy direction, improved market confidence, and greater transparency in forex trading, the exchange rate gap has now narrowed to approximately 4-5 percent.
Cardoso acknowledged that Nigeria had faced severe economic challenges, including capital flight, multiple exchange rate regimes, currency depreciation, high inflation, and a backlog of foreign exchange transactions. These issues had eroded investor confidence and created instability in the financial markets.
Upon assuming office, Cardoso stated that his administration prioritized restoring confidence in the forex market by clearing the backlog of outstanding transactions and reinforcing Nigeria’s commitment to economic stability.
To curb inflation and ensure macroeconomic discipline, the CBN adopted a tight monetary policy stance, raising interest rates by 850 basis points over the past year. The bank also moved away from quasi-fiscal interventions, which had previously distorted the economy, and instead embraced a more orthodox monetary policy framework.
One of the most significant policy changes under Cardoso’s leadership has been the removal of Nigeria’s long-standing fuel subsidy. He revealed that the subsidy, along with inefficiencies in the forex market, had cost the country approximately 6% of its Gross Domestic Product (GDP) annually.
Unlike previous administrations that lacked the political will to end the subsidy, the current government took decisive action, leading to substantial fiscal savings and a more sustainable economic outlook.
To strengthen Nigeria’s financial system, the CBN mandated that banks increase their capital base to build resilience against future economic shocks. Cardoso stated that this recapitalization effort has already yielded positive results, ensuring that the banking sector remains robust and capable of supporting the country’s economic growth.
Addressing Nigeria’s financial inclusion rate, which currently stands at 74 percent, Cardoso emphasized the need for aggressive expansion to ensure that economic growth benefits all Nigerians, particularly those in underserved communities.
Cardoso pointed to digitalisation as a crucial tool for financial inclusion, noting that expanding mobile money services and leveraging technology—especially for gender-focused initiatives—could significantly close the financial access gap.
The CBN Governor stated that Nigeria’s monetary policy decisions have been tailored to its unique economic conditions rather than global trends.
He pointed out that while some international financial experts were initially skeptical of Nigeria’s tightening stance, the country’s approach has since been validated, with many analysts now acknowledging its effectiveness.
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