By Uche Usim
2024 has proven to be a watershed period for Nigeria’s economy, characterised by mounting inflationary pressures, assertive monetary interventions and sweeping reforms championed by the Central Bank of Nigeria (CBN).
The CBN Governor, Mr Yemi Cardoso, was literally on the hot seat throughout the year. Tasked with stabilising an economy grappling with multifaceted fiscal and monetary challenges, especially currency volatility, the apex bank, captained by Cardoso, took bold steps to ensure a somewhat tranquil financial landscape.
The CBN drove growth and laid the foundation for a more resilient and sustainable economy. These made this year a critical milestone in Nigeria’s economic evolution.
From historic interest rate hikes to consumer protection initiatives, the CBN’s actions accentuated its strong commitment to economic stability and financial inclusivity. As the year draws to a close, a comprehensive review of the bank’s policies and their impact highlights a challenging, yet remarkable year in Nigeria’s financial history.
Combating inflation and incessant rate hikes
Faced with soaring inflation, the CBN took decisive action in 2024, raising the Monetary Policy Rate (MPR) four times to 27.50% by year-end.
The apex bank raised interest rates to 26.25% in May 2024; followed by another 50 basis points increase to 26.75% in July 2024. At its September 2024 meeting, the MPC raised the MPR by 50 basis points to 27.25% and at the last meeting for 2024, it raised MPR to 27.50%. These incremental hikes were part of a wider strategy to rein in inflation, which saw a significant decline from 33.40% in July to 32.15% in August.
This contractionary monetary policy, coupled with foreign exchange market reforms, bore fruit as the economy grew by 3.46% in Q3 2024, outperforming the 2.54% growth recorded in the same period in 2023. The telecom and financial services sectors were key drivers, achieving a remarkable 5.17% growth, while improved oil production and domestic refining contributed to the GDP rebound.
However, agriculture and manufacturing lagged, highlighting the urgent need for targeted interventions in these critical sectors.
Recapitalisation of banks
The CBN’s directive in November 2023 requiring banks to meet new capital thresholds by March 2026 marked a strategic move to strengthen the banking system. Banks were provided with options such as equity issuance, mergers or license adjustments to meet the requirements. Implementation strategies were due by April 2024.
Licensing innovations
Approval for one bank to operate as a non-operating financial holding company. Transition of a merchant bank to a national commercial bank.
Two banks received approvals-in-principle for regional commercial licenses, with one focusing on non-interest banking. sixteen new microfinance banks licensed, and 53 previously revoked licenses reissued.
Dormant account guidelines
To manage unclaimed balances, the CBN issued new guidelines in July 2024, emphasizing the protection of dormant accounts and ensuring funds are reunited with rightful owners.
Consumer protection and financial inclusion
The CBN enhanced its consumer protection framework to restore public confidence in the financial system.
It resolved over 19,000 customer complaints, leading to refunds totaling N7.05 billion and $714,569.03.
Again, the Central Bank unveiled the Unified Complaints Tracking System (UCTS). It was introduced to streamline grievance resolution.
Again, the We-FI Code was launched to support women entrepreneurs, aimed at closing the 9% gender gap in financial inclusion.
The CBN updated the Financial Literacy Curriculum for Nigerian schools, aligning with global trends to improve financial decision-making among the youth.
Foreign exchange market reforms
To address the persistent challenges in the FX market, the CBN undertook sweeping reforms by the unification of the FX framework to enhance liquidity. There was the clearance of $7 billion in FX forward obligations, thus stabilising exchange rates.
It launched the Electronic Foreign Exchange Matching System (EFEMS) to curb speculation and improve transparency.
External reserves increased to $37.9 billion by July 2024, up from $33.6 billion in October 2023.
Cybersecurity and fintech advancements
The Payments System Vision (PSV) 2025 initiative expanded on Nigeria’s fintech success. Key developments included: Adoption of ISO 27001 standards for cybersecurity; introduction of a risk-based cybersecurity framework; strengthened Anti-money Laundering (AML) measures to address digital asset risks.
The CBN also enforced stricter Know Your Customer (KYC) regulations, tying Tier 1 accounts and digital wallets to BVNs or NINs to curb fraud.
Market conduct and stability measures
To enhance financial system resilience, the CBN implemented policies such as: prohibiting the distribution of unearned income (e.g., foreign currency revaluation gains) to bolster countercyclical buffers.
The CBN’s reforms have extended beyond internal improvements to addressing external perceptions. The restriction on unearned income distribution has enhanced market transparency, while Nigeria’s removal from the FATF Grey List highlights the country’s strides in combating financial crimes. These achievements symbolise the Bank’s strong focus on safeguarding the integrity of the financial system.
Industry watchers lauded the bank for intensifying supervision of banks to expedite Nigeria’s delisting from the FATF Grey List.
Driving sustainability
In collaboration with the Nigerian Climate Change Council, the CBN developed a Carbon Market Framework to attract sustainable finance and foreign investments. These efforts align with its ambition to position Nigeria as Africa’s leading financial hub.
The fruits of these efforts are evident in the upgraded ratings from Fitch Ratings in May 2024. With Nigeria’s economic outlook revised from stable to positive, the move reflects increased financial stability and effective policy implementation. It is a testament to the country’s progress in fostering a conducive environment for growth and investment.
Recognising the need for expertise in economic analysis and policy making, the CBN has invested heavily in staff training programmes. These initiatives aim to enhance the skills and competencies of its workforce, ensuring they are equipped to navigate the complexities of a rapidly evolving global economy. By prioritising knowledge and innovation, the apex bank, stakeholders note, is not just preparing its team for the present but also positioning them as drivers of future economic growth.
In a bid to modernise its operations, the CBN has embraced mobile technology for data collection and analysis. This integration has streamlined processes, improved accuracy, and provided timely insights critical for policy formulation. The fusion of technology and traditional banking practices underscores the Bank’s commitment to leveraging innovation for better governance.
Challenges and future directions
While progress has been significant, challenges remain. Agriculture and manufacturing sectors continue to underperform, highlighting the need for sustained investment and policy focus.
The CBN Governor, Olayemi Cardoso, has reiterated the urgency of economic diversification to reduce reliance on oil and foster inclusive growth.
The CBN’s actions in 2024 have redefined Nigeria’s financial landscape, demonstrating its resolve to stabilise the economy and inspire confidence among stakeholders.
As Nigeria enters 2025, experts ask the CBN to focus on transparency, innovation and collaboration with fiscal authorities promises to build on these gains and steer the country toward a more resilient and diversified economy.