The directive on exchange rate unification to reduce arbitrage in the markets came two years ago. The policy has bridged the gap between the official and parallel market rates.
Other policies instituted by the Central Bank of Nigeria (CBN) like the recapitalisation of banks, introduction of electronic FX matching platform and a new FX code as well as deployment of monetary policy tightening for price stability have helped to keep the financial system resilient, and put the economy on path of sustainable growth.
Despite several headwinds that faced the financial sector globally, Nigeria’s financial sector remains strong and resilient.
The Central Bank of Nigeria (CBN)-led by Olayemi Cardoso has reinforced the apex bank’s commitment on helping the government achieve its economic objectives through multi-faced reforms in exchange rate unification, payment system and ongoing recapitalisation of banks.
Exchange rate reforms directed by President Bola Tinubu saw the CBN unifying all multiple rates into the Investors and Exporters (I&E) forex window.
By that development, all applications for medicals, school fees, Business Travel Allowance/Personal Travel Allowance, and SMEs are no processed through the I&E window. The operational changes to the foreign exchange market also include the re-introduction of the “Willing Buyer, Willing Seller” model at the I&E Window.
For instance, while the naira exchanges at N1,599/$1 at the official window, the local currency exchanges at N1,605/$1 representing a meagre N6 gap between both rates.
While these reforms have delivered progress, the apex bank has continued to assure domestic and global investors that it will continue to rebuild Nigeria’s economic buffers and strengthen resilience.
For instance, to tackle the pressing challenge of inflation, the CBN acted decisively by raising the Monetary Policy Rate by 875 basis points to 27.5 per cent in 2024—an essential move to contain inflation and restore stability.
In the foreign exchange market, over $7 billion in unfulfilled commitments and a fragmented FX regime characterized by multiple forex rates, had encouraged arbitrage opportunities. The apex bank not only cleared the backlogs, but instituted transparent measures that made it difficult for such to build up again.
Within the two years, there was positive Fitch Ratings on Nigeria economy which moved Nigeria’s long-term foreign-currency issuer default rating (IDR) from negative to stable, meaning that the country stands a better chance of attracting foreign investment, borrow money on international markets at better interest rates, and boost investor confidence.
Fitch also applauded government’s commitment to policy reforms implemented since its move to orthodox economic policies in June 2023, including exchange rate liberalisation, monetary policy tightening, and steps to end deficit monetisation as well as fuel subsidies removal.
“These have improved policy coherence and credibility and reduced economic distortions and near-term risks to macroeconomic stability, enhancing resilience in the context of persistent domestic challenges and heightened external risks,” the agency stated.
Fight against inflation continues
According to National Bureau of Statistics (NBS) data, inflation rate in Nigeria eased to 23.7 per cent in April 2025, down from 24.2 per cent recorded in March.
Nigeria recognises the threats of inflation to Nigerians welfare and is taking strategic measures to bring it down to single digit and expand investment frontiers to the economy.
Cardoso said: “We recognize that inflation remains the most disruptive force to the economic welfare of Nigerians. Our policy stance is firmly focused on bringing inflation down to single digits in a sustainable manner over the medium term. Our goal is to restore price stability, protect household purchasing power, and lay the foundation for long-term investment”.
Continuing, Cardoso disclosed that another key pillar of the reforms is a market-determined foreign exchange regime.
“We have embraced market-driven pricing for the naira, significantly enhancing transparency and restoring investor confidence. Again, thanks to disciplined reforms and policy clarity, the naira has stabilized at a more sustainable level against the U.S. dollar. The once-wide gap between the official and parallel market rates has all but disappeared, a first in Nigeria’s recent history, and speculative arbitrage has all but vanished”.
“This renewed stability has restored confidence and spurred autonomous inflows through formal channels. These inflows are diversifying our foreign exchange sources beyond oil,” he stated.
Recapitalisation of banks
The ongoing recapitalization of banks comes with several benefits to the economy, including helping the lenders take bigger risks by banking underserved markets.
On the recapitalisation, Cardoso said: “This strategic move ensures that banks are well-capitalized, enabling them to take on greater risks, particularly in underserved markets. With stronger capital bases, banks can provide more loans and financial products to Micro Small and Medium Enterprises (MSMEs), rural communities, and other vulnerable segments that have previously struggled to access formal financial services”.
The CBN had on March, 28, 2024 announced a two-year bank recapitalisation exercise which commenced on April 1, 2024, and is expected to end on March 31, 2026.
The recapitalization plan requires minimum capital of N500 billion, N200 billion, and N50 billion for Commercial Banks with International, National, and Regional licenses respectively.
Cardoso said the recapitalisation policy not only strengthens financial stability but also serves as a catalyst for inclusive growth.
“By enabling banks to extend more credit to MSMEs, we enhance job creation and productivity. Furthermore, with increased capital, banks can invest in technology and innovation, crucial for driving digital financial services such as mobile money and agent banking. These technologies are key to breaking down geographic and economic barriers, bringing financial services to even the most remote areas,” he stated.
The event presented opportunity for the CBN to launch the Women Financial inclusion Dashboard, Women Entrepreneurs Finance Code and Financial Inclusion of Forcibly Displaced Persons.
Also, the CBN recently took strategic step to enhance transparency and boost market confidence with the inauguration of the Nigeria Foreign Exchange Code (FX Code) in Abuja. The FX Code has so far ignited naira stability at both official and parallel markets.
Cardoso, recently launched the FX Code, emphasising integrity, fairness, transparency, and efficiency as critical pillars for driving Nigeria’s economic growth and stability.
He emphasized that the FX Code was built on six core principles: ethics, governance, execution, information sharing, risk management and compliance, as well as confirmation and settlement processes.
Backward integration gains ground
Nigeria stands at a crucial juncture where the need to promote local manufacturing has never been more urgent.
As the businesses and economy gear towards growth and development, promoting local manufacturing will not only create jobs, earn more forex from exports and support local currency, it can serve as a catalyst for economic and social progress.
This however, requires a delicate balance: ensuring that key players in the economy, including the telecoms embrace backward integration, a strategy where companies source and produce essential materials locally instead of relying on imports. They need to rely less on imported raw materials for their operations.
Cardoso gave insights on what the economy stands to gain from backward integration in the telecoms sector.
He spoke in Abuja during a visit by Airtel Africa’s management team, led by Group CEO Sunil Taldar. Cardoso stressed that local production would help reduce pressure on the dollar, create jobs, and boost Nigeria’s economy.
He said that massive production of key inputs, that are currently being imported, like SIM cards, cables, and towers is essential.
He noted that over the past 16 months, the CBN has worked to stabilize the foreign exchange (forex) market, strengthen the Naira, and attract investors. With these improvements, he urged telecom firms to embrace backward integration.
In response, Airtel Africa’s CEO, Sunil Taldar, praised the CBN’s reforms and expressed support for local production, saying it would benefit telecom companies in the long run. He also reaffirmed Airtel’s commitment to expanding financial inclusion through technology.
Taldar was accompanied by Airtel Nigeria CEO, Dinesh Balsingh; Group CFO, Jaideep Paul; and Director of Corporate Communications and CSR, Femi Adeniran.
Executive Secretary of the Association of Licensed Telecommunication Operators of Nigeria (ALTON), Gbolahan Awonuga, said that aside telecom operators, other key business owners and entrepreneurs
can also invest in the local manufacturing of key components in telecoms operations.
More views from stakeholders
The World Bank expects Nigeria’s economy to grow 3.6 per cent this year. World Bank’s lead economist for Nigeria, Alex Sienaert commended the Nigerian government for implementing macroeconomic reforms that have stabilized the economy.
However, he pointed out that more efforts are needed to ensure that this growth is inclusive, particularly through expanding cash transfer programmes for the vulnerable populations in the country.
Sienaert added that international experience shows that the public sector alone cannot generate sustainable economic growth and jobs. He stressed that public resources remain limited and that a successful strategy for Nigeria would involve positioning the public sector to both provide essential services—such as human capital development and infrastructure—and create an enabling environment for the private sector to thrive.
“Nigeria is no exception, particularly since public resources remain constrained. A useful strategy is to position the public sector to play a dual role as a provider of essential public services, especially to build human capital and infrastructure, and as an enabler for the private sector to invest, innovate, and grow the economy,” Sienaert added.
The World Bank also said Nigeria’s economy needs to grow at a rate five times faster than its current pace to achieve the $1 trillion target by 2030 as well as address the country’s rising poverty levels
Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, said the administration has undertaken some very important corrective reforms which should be applauded.
These were the commitment to exchange rate convergence and the removal of fuel subsidy. These were inevitable reforms necessary to fix damaging distortions in the economy.
Continuing, he said: “We need to see more fiscal and tax incentives to drive recovery of growth sectors of the economy and mitigate the pains of the current reforms. The government now has the fiscal space to support the businesses and the vulnerable segments of the society with these policy driven incentives.”
Former Registrar, Chartered Institute of Bankers of Nigeria (CIBN), Dr. Uju Ogubunka, said the government should listen more to the people. He said the President’s courageous decisions on subsidy removal, exchange rate reforms are commendable, but there is need to consider their impact on the populace.
“Government should find a better way of ensuring the palliatives go round and provide longer-term benefits to the people. I advise the government should give funds to companies that produce goods that are essential to make them reduce the prices,” he said.
President, Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, said opening up the diaspora remittances collection points to more players will deepen dollar inflows to the economy.
“I advise the president to ensure that Nigeria’s forex sources are diversified through the grant of an autonomy to the BDCs to be readmitted into the frame and legislation of the apex bank foreign exchange policies as agents of Diaspora remittances and cash imports through the banks,” he said.
Against all odds, Nigeria is increasingly recognized as a rising economic force, admired for the resolve shown in implementing difficult but necessary reforms. These achievements, while encouraging, only strengthen economic mangers resolve to press forward to take the economy to sphere of sustainable growth and development.
