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Says interventions tamed inflation at 2.81% in December 2024
From Adanna Nnamani, Abuja
The Central Bank of Nigeria (CBN) has revealed that diaspora remittances are estimated to increase to N31.7871 trillion from N22.734 trillion when the fourth-quarter 2024 figures are released.
CBN disclosed this on Thursday at the 2025 Monetary Policy Forum, attended by ministers, heads of departments and agencies involved in economic matters, as well as private sector players, in Abuja.
Speaking at the event, CBN Governor Mr Olayemi Cardoso said the bank’s policy interventions helped prevent Nigeria’s inflation from soaring to 42.81% by December 2024.
Cardoso pledged that the apex bank would continue employing orthodox monetary policy measures to tackle inflation in 2025.
According to him, “We have seen a significant increase in diaspora remittances from N12.478 trillion in 2023 to N22.734 trillion at end-Q3 2024. This figure is estimated to increase to N31.7871 trillion when the fourth-quarter 2024 numbers are released.
“Counterfactual estimates suggest that without these decisive policy interventions, inflation could have reached 42.81% by December 2024.”
“Throughout 2024, the bank implemented several bold policy measures across six MPC meetings, including raising the Monetary Policy Rate (MPR) by a cumulative 875 basis points to 27.50%, increasing the Cash Reserve Ratio (CRR) of Other Depository Corporations (ODCs) by 1,750 basis points to 50.00%, and adjusting the asymmetric corridor around the MPR.”
Additionally, he said the bank in 2024 undertook critical reforms to strengthen the financial system and ensure macroeconomic stability through unified multiple exchange rate windows to enhance efficiency in the FX market.
“This reform yielded tangible results, with remittances through International Money Transfer Operators (IMTOs) rising 79.4% in the first three quarters of 2024 to US$4.18 billion, compared to US$2.33 billion in the same period of 2023.
“The CBN also cleared a backlog of foreign exchange commitments totalling US$7.0 billion, restoring market confidence and improving FX liquidity; lifted restrictions on 41 items previously banned from access to the official FX market, a measure introduced in 2015; and introduced new minimum capital requirements for banks, effective by March 2026, to strengthen the resilience and global competitiveness of Nigeria’s banking sector, positioning it to support the ambition of a US$1 trillion economy.
“Others include the launch of the WIFI initiative under the National Financial Inclusion Strategy, designed to bridge the gender gap in financial access, empowering women through financial services, education, and digital tools, and the recently launched Nigeria Foreign Exchange Code, marking a decisive step forward for integrity, fairness, transparency, and efficiency in our FX market. Built on six core principles, it represents a binding commitment from the financial community to rebuild trust and inspire confidence.”
“These reforms reflect our commitment to creating an enabling environment for inclusive economic development. However, achieving macroeconomic stability requires sustained vigilance and a proactive monetary policy stance,” Cardoso added.
To tackle inflation in 2025, the CBN Governor cautioned that “Managing disinflation amidst persistent shocks requires not only robust policies but also coordination between fiscal and monetary authorities to anchor expectations and maintain investor confidence.”
He said Nigeria’s focus must remain on price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and ease economic hardship.
“As we move forward into 2025, I am optimistic that we have turned a corner and that disinflation is within reach. However, we must remain committed to bold, coordinated policy measures to consolidate our progress,” he stated.
Earlier, Mohammed Abdullahi, CBN Deputy Governor of Economic Policy, said that the liberalisation of the foreign exchange market played a crucial role in unifying a fragmented system and mitigating substantial premiums caused by speculative activities and market inefficiencies.
According to Abdullahi, before the implementation of a flexible exchange rate regime, the average exchange rate premium was alarmingly high at 62.33% from January to May 2023. However, with the introduction of the flexible exchange rate regime, this premium was significantly reduced to an unprecedented low of 0.10% by June 2023, indicating substantial progress towards market convergence.
“Notably, following these reforms, we have seen a significant increase in diaspora remittances from N12.478 trillion in 2023 to N22.734 trillion at end-Q3 2024. This figure is estimated to increase to N31.7871 trillion when the fourth-quarter 2024 numbers are released. These, among others, would further strengthen the supply of foreign exchange while ensuring the stability of the naira,” he said.
However, he lamented that the bank’s disinflation efforts had been fraught with challenges, including persistent demand and supply-side shocks, which have hindered its ability to achieve a single-digit inflation target.
“These shocks, among other reasons, have necessitated decisive policy actions to prevent entrenched inflationary expectations. This highlights the critical importance of maintaining robust communication and engagement with stakeholders, a commitment exemplified by this forum,” he assured.