In the midst of pressing economic challenges, Mr. Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), has reaffirmed his commitment to creating a resilient central bank capable of effectively addressing the nation’s economic issues. Speaking at the recent 30th edition of the Nigeria Economic Summit (#NES30), Cardoso outlined the various hurdles he faces and the strategic measures he has initiated to tackle these challenges, particularly emphasizing the urgent need to control inflation.
Cardoso stressed that managing inflation is of paramount importance. He explained that while monetary policies can help stabilize the economy, they cannot replace fundamental economic principles. He expressed concern that unchecked inflation can deter investment, diminish purchasing power, and negatively affect businesses by reducing consumer spending. His goal is to maintain inflation at manageable levels to foster a conducive environment for economic growth.
Reflecting on his tenure at the CBN, Cardoso acknowledged the significant difficulties he inherited, including skyrocketing inflation and a backlog of foreign currency exceeding $7 billion. This situation had prompted many international companies to withdraw from Nigeria due to difficulties in accessing foreign exchange. He also noted the complications arising from multiple exchange rates, which created disparities in foreign currency access among businesses. Additionally, a lack of public confidence in the naira exacerbated its depreciation.
Upon assuming leadership, Cardoso aimed to realign the CBN’s focus on its core mandates—price stability and effective currency management. He asserted that once these foundational elements are addressed, other economic improvements will naturally follow. He reported positive shifts in the country’s ratings by international agencies, with several upgrading Nigeria’s outlook, which reflects a rebuilding of trust and confidence in the CBN.
Addressing the backlog of foreign currency claims, Cardoso acknowledged that immediate action was necessary to reassure international investors. He detailed a systematic approach to verify and settle these claims, indicating that while some claims remain unverified, the CBN is making progress.
The governor highlighted the importance of vigilance in navigating the constantly changing economic landscape, committing to stabilize macroeconomic fundamentals. He noted the challenges faced during the recent Monetary Policy Committee meeting, where decisions had to be made regarding interest rates in the context of inflation management. Cardoso stated that the CBN is focused on using traditional monetary tools rather than excessive interventions, which have historically contributed to economic instability.
He emphasized the critical need to address the fundamentals of the economy, advocating for diversification away from a monolithic economic structure. Cardoso cited the positive impact of recent policy changes, such as the significant increase in remittance flows facilitated by improved engagement with International Money Transfer Operators (IMTOs). These efforts have led to remittances soaring from approximately $200 million to nearly $600 million within a short period.
Additionally, Cardoso highlighted his commitment to promoting women’s roles in the economy. He noted initiatives aimed at enhancing financial inclusion for women entrepreneurs, partnering with various institutions to support women’s businesses.
The governor also touched on the crucial issue of bank recapitalization, underscoring the necessity of strengthening financial institutions to foster resilience. He indicated that the CBN is working closely with banks to ensure they are well-capitalized and capable of withstanding economic shocks, aiming for a robust banking system that supports the goal of becoming a $1 trillion economy.
Furthermore, Cardoso called for a more efficient and transparent CBN, ensuring that all stakeholders can interact with the bank without needing personal connections. He underscored the importance of building capacity within the CBN to enhance its effectiveness.
In closing, Cardoso acknowledged the significant role of youth in Nigeria’s future, emphasizing the need to prepare for an influx of young job seekers. He expressed optimism about the potential of Nigerian youth, citing cultural successes like the global recognition of Nigerian music and film. He encouraged collaboration across generations to harness this potential.
Cardoso commended the Nigeria Economic Summit Group (NESG) for its critical work and called for continued engagement among stakeholders to address Nigeria’s economic challenges collaboratively. He emphasized the need for demand-driven interactions that yield actionable insights and strategies to propel the nation forward.