The governor of the Central Bank of Nigeria, CBN Olayemi Cardoso, has promised better times for the people of Nigeria while also announcing that projected stability will enable Nigeria to reach a $1 trillion GDP by 2030 at the latest.
Cardoso gave a summary of the CBN’s mandate in addition to a thorough analysis of Nigeria’s economic performance, current policy initiatives, and prospects for the rest of 2024.
Cardoso presented the first half-year evaluation of the Bank’s operations for 2024 to the Senate Committee on Banking, Insurance, and Other Financial Institutions on Friday in Abuja.
Cardoso 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.
He claims that due to the Nigerian economy’s resiliency in the first half of 2024, the country’s growth rate increased to 2.98% in the first quarter from 2.31% in the same period the previous year. He emphasized that, with a growth rate of 4.32% and a contribution to GDP of 58.04%, the services sector was the primary engine of the economy. He pointed out that, with a growth rate of 2.19%, the industrial sector also demonstrated improvement.
Regarding the ongoing inflationary pressures, he pointed out that the rate of monthly rises had slowed, indicating the success of the Bank’s anti-inflationary actions. Headline inflation increased from 29.90% in January to 34.19% in June 2024.
He said, “The spread between official and BDC rates has narrowed significantly from N162.62 in January to N47.22 in June 2024, indicating successful price discovery, increased market efficiency, and reduced arbitrage opportunities.
“The stock of external reserves increased to US$36.89 billion as of July 16, 2024, compared with US$33.22 billion at end-December 2023, driven largely by receipts from crude oil related taxes and third-party receipts.
“In Q1 2024, we maintained a current account surplus and saw improvements in our trade balance.
“Our external reserves level as at end-June 2024 can finance over 11 months of import of goods and services, or 14 months of goods only. This is significantly higher than the prescribed international benchmark of 3.0 months, indicating a strong buffer against external shocks.
“The banking sector remains robust and diverse, comprising twenty-six commercial banks, six merchant banks, and four non-interest banks. Key indicators such as capital adequacy, liquidity, and non-performing loan ratios all showed impressive improvements, underscoring the sector’s growing stability and resilience.
“The equity market has shown impressive performance, with the All-Share Index rising by 33.81 per cent and market capitalization expanding by 38.33 per cent from December 2023 to June 2024, reflecting growing investor’s confidence.
“While we are encouraged by these positive trends, the CBN remains vigilant and committed to implementing policies that support sustainable growth in our financial markets, while maintaining overall economic stability”
Assuring the committee members that the necessary steps and plans have been put in place to address new issues, Cardoso stated, “We have implemented a comprehensive set of monetary policy measures to combat inflation.” These include increasing Cash Reserve Ratios, normalizing Open Market Operations as our main tool for managing liquidity, boosting the policy rate by 750 basis points to 26.25 percent, and implementing Inflation Targeting as our new framework for monetary policy.
“In the area of banking supervision, the CBN has taken decisive actions to ensure the safety, soundness, and resilience of the banking industry.
“ Key measures include intervention in three banks, revocation of Heritage Bank’s license, increasing minimum capital requirements, and enhancing AML/CFT supervision.
“We are in the process of reviewing the Bank’s micro and macroprudential guidelines to reinforce the resilience of financial institutions in Nigeria to withstand tightened conditions, thus creating a secure and attractive investment climate.
“We have signaled our plans to re-capitalize deposit money banks in Nigeria to improve capital inadequacy and their capacity to grow the economy
“Our ultimate goal is to create a more stable, resilient, and efficient financial system that can better serve the Nigerian economy, while adhering to international best practices.”
Earlier in his opening remarks , the Chairman of the Committee, Senator Our ultimate goal is to create a more stable, resilient, and efficient financial system that can better serve the Nigerian economy, while adhering to international best practices.”
Earlier in his opening remarks , the Chairman of the Committee, Senator Adetokunbo Abiru said that the overall purpose of the interaction “ is to update the committee on efforts, activities, objectives and plans of the Bank with respect to monetary policy” Abiru said that the overall purpose of the interaction “ is to update the committee on efforts, activities, objectives and plans of the Bank with respect to monetary policy”
