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Despite the scathing economic realities, the Governor, Central Bank of Nigeria (CBN), Olayemi Cardoso, has reaffirmed the Bank’s commitment to implementing policies that foster sustainable growth in the financial markets while ensuring overall economic stability.
He pledged this during his presentation of the 2024 first half-year review of the Bank’s activities to the Senate Committee on Banking, Insurance, and Other Financial Institutions at the National Assembly on Friday, July 19, 2024
In his comprehensive briefing, he outlined the CBN’s mandate and provided an in-depth analysis of Nigeria’s economic performance, recent policy measures, and the outlook for the remainder of the year 2024.
He recounted that since assuming duty in October 2023, the Bank’s management had concentrated on stabilising the economy, restoring confidence in financial markets, and establishing a foundation for sustainable growth. Some key focus areas highlighted included curbing inflation, stabilising the exchange rate, enhancing financial sector supervision, promoting financial inclusion, and increasing transparency in monetary policy decisions.
Speaking on the macroeconomic performance since he assumed office, Mr. Cardoso highlighted the resilience of the Nigerian economy in the first half of 2024, reporting a growth rate of 2.98% in the first quarter, up from 2.31% during the same period last year. He emphasised that the Services sector was the main economic driver, contributing 58.04% to GDP with a growth rate of 4.32%. He noted that the Industrial sector also showed improvement, achieving a growth rate of 2.19%.
Addressing the persistent inflationary pressures, with headline inflation rising from 29.90% in January to 34.19% in June 2024, he noted that the pace of monthly increases had moderated, suggesting the effectiveness of the Bank’s anti-inflationary measures. He also highlighted the significant narrowing of the spread between official and BDC rates, indicating successful price discovery and reduced arbitrage opportunities. Additionally, he pointed out the notable increase in external reserves, largely attributed to receipts from crude oil-related taxes and third-party payments
Highlighting the banking sector’s achievements, Mr. Cardoso reported improvements in key indicators such as capital adequacy, liquidity, and non-performing loan ratios. He noted that the capital adequacy ratio remained strong at 12.2%, adding that the industry liquidity ratio increased to 46.2%, and the non-performing loan ratio fell to 3.8%, reflecting enhanced liquid assets and better risk asset quality.
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He further outlined key policy measures the Bank had implemented to tackle domestic macroeconomic challenges, including raising the policy rate to 26.25%, increasing Cash Reserve Ratios, normalising Open Market Operations, and adopting Inflation Targeting as a new monetary policy framework.
He also highlighted the reforms in the foreign exchange market, which resulted in a convergence of official and Bureau de Change rates, promoting transparency and reducing market distortions.
Governor Cardoso emphasised that the ongoing recapitalisation efforts in the banking sector are focused on enhancing financial stability and driving progress toward reaching a $1 trillion economy by 2030.
He expressed optimism about Nigeria’s economic prospects despite acknowledging ongoing challenges. He emphasised the importance of continued cooperation from all stakeholders in overcoming these challenges and achieving robust and inclusive growth.
In his opening remarks, Senator Adetokunbo Abiru, Chairman of the Senate Committee on Banking and Other Financial Institutions, lauded the CBN Governor and his team for their efforts to stabilise the economy since taking office.
He highlighted the new management’s achievements, including a reduction in month-on-month inflation from 2.64% in January 2024 to 2.14% in May 2024, increased exchange rate stability, and a $35 billion boost to the nation’s external reserves. These improvements, Abiru noted, had led to favourable ratings from global rating agencies and enhanced foreign portfolio inflows.
