Nigeria’s foreign reserves surpassed the $40 billion mark for the first time in three years, marking a significant milestone in economic recovery efforts.
Central Bank Governor Olayemi Cardosoattributed the rise to key reforms.
He spoke during a meeting with the Assistant Governor for Monetary Affairs at the Saudi Arabian Central Bank (SAMA), Talal Al-Humond, on the sidelines of the inaugural Conference on Emerging Market Economies in Riyadh.
A statement by CBN said the reserves were at their highest in nearly three years.
The reforms 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 onto, ensures strict adherence to market rules, fostering confidence among investors and market participants.
At the conference organised 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.
Cardoso said: “The CBN will continue implementing policies that enhance macroeconomic stability, promote private sector growth, and create high-quality jobs.”
During a panel discussion moderated by Jihad Azour, Director of the Middle East and Central Asia Department at the IMF, Cardoso addressed critical reforms in Nigeria’s financial markets.
He highlighted that Nigeria had previously experienced a significant gap—sometimes as wide as 60 per cent—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 per cent.
Cardoso acknowledged that Nigeria faced severe economic challenges, including capital flight, multiple exchange rate regimes, currency depreciation, high inflation, and a backlog of foreign exchange transactions.
These issues eroded investor confidence and created instability in the financial markets.
Upon assuming office, Cardoso prioritised 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.
He said petrol subsidy, along with inefficiencies in the forex market, had cost the country approximately six per cent of its Gross Domestic Product (GDP) annually.
To strengthen Nigeria’s financial system, the CBN mandated that banks increase their capital base to build resilience against future economic shocks.
Cardoso said the recapitalisation effort has 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 per cent, Cardoso stressed the need for aggressive expansion to ensure that economic growth benefits all Nigerians, particularly those in underserved communities.
The CBN governor 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.
According to him, 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 sceptical of Nigeria’s tightening stance, the country’s approach has since been validated, with many analysts now acknowledging its effectiveness.
Al-Humond assured Cardoso that the Saudi Arabian Central Bank was open to collaboration with the CBN to achieve mutually beneficial economic objectives.
