Market News

By Uche Usim

In less than three years, the Central Bank of Nigeria (CBN) has orchestrated a dramatic turnaround of the nation’s economy, moving it from the brink of collapse to a path of sustainable growth and restored investor confidence. The achievement, analysts say, marks the most significant monetary intervention in Nigeria in decades.

By 2023, Nigeria’s economic outlook was dire. Once Africa’s largest economy by GDP in 2014, the country had slipped to fourth place behind South Africa, Egypt, and Algeria. Inflation soared to 22.4%, foreign reserves dwindled, and the naira was in free fall. The CBN had reportedly failed to meet a $7 billion backlog in matured foreign exchange obligations, while subsidies and monetary financing had stretched the bank’s policy tools to breaking point.

>span class="s2">When President Bola Ahmed Tinubu assumed office in May 2023, he inherited a near-bankrupt economy with “the naira in a free fall,” according to a former senior CBN official. Immediate reforms were urgent. Fuel subsidies were removed and the FX market liberalised, though the timing coincided with extreme monetary instability. Tinubu quickly suspended and later removed former CBN governor, Godwin Emefiele, and his deputies, replacing them with a team led by Olayemi Cardoso, former head of Citigroup Nigeria.

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“They inherited a mess,” the former official recalls, but they had clarity on what needed to be done: restore autonomy, end fiscal monetisation, pay off FX backlogs, and fix opaque swap arrangements”, a source said.

Cardoso’s approach was disciplined and orthodox. Quasi-fiscal policies introduced during Covid-19, which had fuelled inflation, were halted. Staff reductions and relocations improved efficiency, while a new compliance department strengthened oversight of financial crime, corporate governance, and ESG standards. AI-enabled tools were deployed to modernise operations, and internal transparency became a hallmark of the administration.

Perhaps the most visible reform was in the FX market. The CBN replaced the old multiple-window regime with a transparent, market-driven framework using the electronic foreign exchange matching system (EFEMS). Real-time monitoring, ethical codes for dealers, and elimination of FX backlogs restored credibility. The once-wide spread between official and parallel rates, exceeding 60%, dropped to under 2%. Gross reserves, rebuilt organically, hit $46.7 billion by November 2025, the highest in nearly seven years.

Inflation control became a priority. Through a sharp rise in interest rates, from 18.75% in 2023 to 27.5% in 2024, and tight monetary policies, inflation fell from a 28-year high of 34.8% to 15.1% by January 2026.

With stabilising prices, the CBN cautiously reduced rates to 26.5% in early 2026, signaling a gradual easing of borrowing costs.

Banking reforms ran parallel. A recapitalisation programme, introduced in 2024, raised capital requirements and strengthened resilience. Over 33 banks have already met the new thresholds, while support for microfinance and digital lending expanded access for over 1.2 million small enterprises. Basel III adoption and stress-testing further cemented systemic stability, while fintech and crypto regulation received a boost.

On the cash and payments front, the CBN overhauled the entire cash life cycle, improved ATM regulation, and modernised payment systems. Digital finance initiatives now serve over 12 million users, and the e-naira is being repositioned for wider commercial-bank adoption, furthering financial inclusion.

Externally, Nigeria’s reforms earned international recognition. Fitch upgraded Nigeria from B- to B (stable) in April 2025, while Moody’s raised the rating from Caa1 to B3. The 2025 eurobond offering, oversubscribed fivefold, highlighted restored investor confidence. Removal from the Financial Action Task Force ‘grey list’ underscored improvements in anti-money laundering compliance and governance.

Despite these gains, challenges remain. Inflation has yet to return to single digits, banking system recapitalisation is ongoing, and legislative updates to enshrine CBN independence are still needed. Analysts stress the importance of maintaining transparency, strengthening institutional capacity, and fully modernising monetary law.

For now, however, the verdict is that the CBN’s decisive leadership and disciplined policy interventions have transformed Nigeria’s economic trajectory. “What the CBN has achieved is nothing short of remarkable,” says a former top official, summarising the bank’s bold 30-month journey from crisis management to macroeconomic stability.