The year 2024 has come and gone will be remembered differently by different individuals and organisations. Some have achieved their goals, some have made some appreciable strides, some recorded growth, some missed their targets, but all learnt some lessons, which will help guide their steps in 2025.
For the Central Bank of Nigeria (CBN), and especially for its Governor Olayemi Cardoso who assumed leadership of the apex bank in the third quarter of 2023, the year 2024 was significant. Many waited with bated breath to see what would change in Cardoso’s first year in office, particularly in light of the priorities he listed during his Senate clearance.
The year 2024, as many experts have noted, was a challenging one for the Central Bank. What with the persistent inflationary pressures, some of which were as a result of happenings outside the shores of Nigeria, and therefore beyond the control of Cardoso and his team. Some of the challenges were however as a result of domestic realities directly or indirectly linked to local players in the Nigerian economy.
Even the CBN itself would acknowledge the fact that monetary dynamics played a major role in pushing price pressures. Some of measures adopted by Nigeria with the intention of cushioning the effects of visible challenges ended up having the exact opposite, which further worsened inflation pressures and other economic headwinds, with effect on price and monetary stability.
There were certainly other challenges but the one of inflation had a debilitating impact on the economy. Inflation usually impacts peoples purchasing power, discourages investment, and exacerbates inequality as even those with some liquidity suffer crisis of confidence.
The CBN therefore spent most parts of the year 2024 churning out various approaches using the platform of its Monetary Policy Committee (MPC). In the six meetings of the MPC meetings, the Monetary Policy Rate (MPR) rose by a cumulative 875 basis points to 27.50 percent, the Cash Reserve Ratio (CRR) of Other Depository Corporations (ODCs) increased by 1750 basis points to 50.00 percent, and adjusting the asymmetric corridor around the MPR. Without these actions, inflation could have reached 42.81 percent by December 2024.
In 2024, Cardoso’s reforms yielded some positive results. These achievements include:
Unification of exchange rates
The unification of the multiple exchange rate windows in the country in a bid to improve liquidity and stability as well as efficiency in the foreign exchange market. This reform yielded tangible results as remittances through International Money Transfer Operators (IMTOs) rose 79.4 percent in the first three quarters of 2024 to US$4.18 billion, compared to US$2.33 billion in the same period of 2023.
The segmentation of the FX market into different windows had encouraged speculation. But the unification meants that all transactions now take place through the Investors and Exporters (I&E) window, where market forces determine the exchange rate.
Cleared a backlog of foreign exchange commitments
Cardoso successfully cleared a $7 billion backlog of valid forex, reduced forex volatility. By July 2024, he saw an increase in the nation’s external reserves from $33.6 billion in 2023 to $37.9 billion. In addition to this, the CBN also lifted restrictions on 41 items previously banned from access to the official FX market, a measure introduced in 2015.
CBN also introduced new minimum capital requirements for banks, effective by March 2026, to strengthen the resilience and global competitiveness of Nigeria’s banking sector, positioning it to support the ambition of a US$1 trillion economy. The minimum capital base for commercial banks with international authorisation is now N500bn, for commercial banks with national authorisation it is N200bn, for banks with regional authorization it is N50bn, while the new requirements for non-interest banks with national and regional authorisations are N20bn and N10bn, respectively.
Despite the challenges and other hurdles encountered by the CBN, the Cardoso-led management successfully recorded positive outcomes, especially with regards to stability in the foreign exchange market and the steady increase in external reserves which stood at over US$40 billion at the end of the 2024. It was surely a good way to end the year, even as efforts continue to build on the tempo in the year 2025.
- Lawal Nasir is a journalist based in Abuja
