Governor of the Central Bank of Nigeria, CBN, Mr. Olayemi Cardoso, has said that the policy direction of the bank is aim at promoting sustainable economic growth and stability such that will restore confidence in financial markets for the country to achieve $1trillion economy by 2030.
Presenting the first half-year review of the CBN activities in 2024 to the Senate Committee on Banking, Insurance and Other Financial Institutions at the weekend in Abuja, Cardoso outlined the bank’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.
The CBN governor informed 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 highlighted some key focus areas as curbing inflation, stabilising the exchange rate, enhancing financial sector supervision, promoting financial inclusion, and increasing transparency in monetary policy decisions.
According to him, the resilience of the Nigerian economy in the first half of 2024, gave a growth rate of 2.98% in the first quarter, up from 2.31% during the same period last year.
Cardoso emphasized that the services sector was the main economic driver, contributing 58.04% to GDP with a growth rate of 4.32% adding that the industrial sector also showed improvement, achieving a growth rate of 2.19%.
On 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.
The CBN governor also highlighted the significant narrowing of the spread between official and BDC rates, indicating successful price discovery and reduced arbitrage opportunities.
Part of the strong indicators for the growing economy, according to him, is the notable increase in external reserves, largely attributed to receipts from crude oil-related taxes and third-party payments.
“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 said.
Cardoso added that the capital adequacy ratio remained strong at 12.2%, aside the industry liquidity ratio which has also increased to 46.2%, and the non-performing loan ratio fell to 3.8%, reflecting enhanced liquid assets and better risk asset quality.
The CBN governor further outlined key policy measures the apex 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.
In his opening remarks, the chairman of the committee, Senator Adetokunbo Abiru (APC Lagos East) lauded the CBN governor and his team for their efforts to stabilise the economy since taking office.
He chronicled the new management’s achievements as 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, according to Abiru, had led to favourable ratings from global rating agencies and enhanced foreign portfolio inflow.