Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has assured Nigerians of better days ahead, just as he declared that the planned stability will make Nigeria hit a $1 trillion economy by 2030.
Cardoso outlined the CBN’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.
He made the presentation to the Senate Committee on Banking, Insurance and Other Financial Institutions on Friday in Abuja on 2024 first half-year review of the Bank’s activities.
The CBN Governor recounted that since assuming duty in October 2023, the Bank’s management had concentrated on stabilizing the economy, restoring confidence in financial markets and establishing a foundation for sustainable growth.
According to him, the resilience of the Nigerian economy in the first half of 2024, gave a growth rate of 2.98 percent in the first quarter, up from 2.31 percent during the same period last year.
He stressed that the Services Sector was the main economic driver, contributing 58.04 percent to GDP with a growth rate of 4.32 percent, noted that the Industrial sector also showed improvement, achieving a growth rate of 2.19 percent.
On the persistent inflationary pressures, with headline inflation rising from 29.90 percent in January to 34.19 percent in June 2024, he noted that the pace of monthly increases had moderated, suggesting the effectiveness of the Bank’s anti-inflationary measures.
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 16 July 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.
Read also: Climate activists in Germany criticize fossil fuel investments
“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 investors’ 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.”
Cardoso, who assured members of the committee that required measures and strategies have been mapped out to confront emerging challenges, said: “To combat inflation, we have implemented a comprehensive set of monetary policy measures. These include raising the policy rate by 750 basis points to 26.25 percent, increasing Cash Reserve Ratios (CRR), normalizing Open Market Operations (OMO) as our primary liquidity management tool, and adopting Inflation Targeting as our new monetary policy framework.
“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 also introduced new frameworks for Cash Reserve Requirements and cyber security and prohibited the use of foreign currency collaterals for local currency loans.
“We are in the process of reviewing the Bank’s micro and macro-prudential 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 capable of better serving the Nigerian economy, while adhering to international best practices.”
Earlier in his opening remarks, Chairman of the Committee, Senator Adetokunbo Abiru, said 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”
