With the year 2024 gone, it’s essential to review the Central Bank of Nigeria’s (CBN) strategic actions and their impact on the country’s economy in the past year. The outgone year has been challenging, with rising inflation rates prompting the CBN’s Monetary Policy Committee (MPC) to raise interest rates to 26.25 percent in May, followed by subsequent increases to 26.75 percent in July and 27.50 percent in the final meeting of the year.
The Naira was also a challenge. Many citizens took preference to converting their Naira to the dollar or any other foreign currency. Major companies also left the country and thus repatriated their foreign currency savings. The high demand for the dollar for consumption and services that can ordinarily be provided domestically put severe pressure on the naira , thus giving the CBN as the monetary policy regulator sleepless nights as it scrambled from time to ensure the exchange rate remains stable.
2024 indeed was one hell of a year that stretched the wits of the Central Bank top management.
Despite these challenges, the CBN made significant strides, ratcheting series of tough but desirable policies designed at strengthening the Nigerian financial system and making significant gains in growing the much depleted foreign reserves. ‘No sweat, No gains’ they say. The CBN in 2024 worked for the future.
Many more gains are expected to crystallise in the future only if the apex bank leadership will as anticipated remain focused, disciplined and determined in her policy implementation.
According to Governor Olayemi Cardoso, “The measures being implemented are designed to curb spiralling and stubborn inflation, coupled with foreign exchange market reforms all of which were aimed at bolstering Nigeria’s economic growth.” This assertion is supported by the country’s economic growth of 3.46 percent in Q3 2024, driven primarily by the resilience of the services sector, particularly telecoms and financial services.
The CBN’s efforts to stabilize the economy have been multifaceted. One of the key strategies employed by the bank has been the implementation of foreign exchange market reforms. These reforms have included a review of Bureau de Change (BDCs) licensing requirements, capital standards, and a franchise model to enhance FX distribution and oversight. The CBN has also introduced a risk-based examination to proactively identify policy gaps and improve conduct among financial institutions. Holding financial institutions accountable and responsible remains critical to putting the country on the right economic path. The sanctioning of some defaulting financial institutions demonstrated that the CBN can bark and bite.
Furthermore, the CBN has taken significant steps to improve financial inclusion in the country. The bank has launched the Women Entrepreneurs Finance Initiative (We-FI) Code, aimed at closing the 9.0 percent gender gap in financial inclusion by improving access to financial services for women-owned MSMEs. The CBN has also updated and benchmarked the Financial Education Curriculum (FEC) in Nigerian schools to align with global trends and promote financial inclusion.
In addition to these initiatives, the CBN has also made significant strides in enhancing cybersecurity measures to protect the financial system from cyber threats and restore investors’ confidence in the financial system. The bank has adopted ISO 27001 standards and introduced a risk-based cybersecurity framework. The CBN has also conducted a cyber and technology assessment to improve resilience and operational efficiency in the financial sector.
The CBN’s efforts to promote transparency and accountability in the financial system have also been noteworthy. The bank has implemented the Unified Complaints Tracking System (UCTS) and developed USSD (*959#) for verification of licensed financial institutions. These initiatives have improved customer service standards and increased engagement with formal financial institutions.
Despite these achievements, there are still significant challenges facing the Nigerian economy. The country’s reliance on a single sector, oil, is unsustainable and has led to significant economic volatility. The CBN has recognized the need for economic diversification and has taken steps to support the development of other sectors, such as agriculture and manufacturing. There is also need for fiscal discipline to cut down waste , improve government efficiency, end abuse of ways and means and excessive borrowing by government. I do not see much economic sense in borrowing for consumption rather than for productivity.
In the year 2025, there are several expectations from the CBN. Some of these expectations include:
– Continued Economic Growth: Building on the economic growth achieved in 2024, the CBN is expected to continue implementing policies that support economic growth and development.
– Improved Financial Inclusion: The CBN is expected to continue promoting financial inclusion, particularly among women and youth, through initiatives such as the We-FI Code.
– Enhanced Cybersecurity: The CBN is expected to continue enhancing cybersecurity measures to protect the financial system from cyber threats.
– Increased Transparency and Accountability: The CBN is expected to continue promoting transparency and accountability in the financial system, particularly through the implementation of the UCTS and the development of USSD (*959#) for verification of licensed financial institutions.
In conclusion, the CBN’s strategic actions in 2024 have had a significant impact on Nigeria’s economy. As we enter the new year, there are high expectations from the CBN to continue implementing policies that support economic growth and development, improve financial inclusion, enhance cybersecurity, and promote transparency and accountability in the financial system. The CBN’s efforts to promote economic diversification, support the development of other sectors, and enhance the business environment are also crucial for the country’s long-term economic growth and development.
The CBN’s governor, Mr. Olayemi Cardoso, has demonstrated a clear understanding of the challenges facing the Nigerian economy and has taken significant steps to address them. As we look to the future, it is essential that the CBN continues to implement policies that support economic growth and development, improve financial inclusion, and promote transparency and accountability in the financial system.
The Nigerian economy has the potential to be one of the largest and most vibrant in Africa. However, this potential can only be realised if the country is able to overcome its current challenges and create a more favourable business climate.