In just under two years, Nigeria’s Central Bank under Governor Olayemi Cardoso has undergone a remarkable transformation. Amid mounting economic headwinds and institutional distrust, a wide-ranging reform agenda has been launched—one that is not only reversing Nigeria’s macroeconomic decline but also repositioning the country as a credible and competitive player on the global financial stage.
This shift was recently validated at the 2025 African Banker Awards held in Abidjan, Côte d’Ivoire, where Governor Cardoso was honoured as Central Bank Governor of the Year. The accolade reflects growing continental and international recognition of the bold, strategic changes being executed at the apex of Nigeria’s financial system.
A Nation at a Crossroads: Reform Mandate in the Face of Crisis
When President Bola Tinubu appointed Cardoso as CBN Governor in September 2023, Nigeria was at a critical economic juncture. The inflation rate had soared to 33.88%, driven by spiking fuel prices, a weakening naira, and persistent supply chain disruptions. Investor confidence was low, exchange rate distortions were rampant, and foreign capital was fleeing.
An underlying cause of this instability was a backlog of over $7 billion in unmet FX commitments, which, combined with a fragmented dual exchange rate system, contributed to the naira's steep depreciation. Meanwhile, the CBN’s credibility had been eroded by its prior engagement in deficit financing via “Ways and Means” advances, which had ballooned to N22.7 trillion, compromising its price stability mandate.
Wider structural issues only compounded the challenge: a decline in oil output, narrow export base, infrastructural deficits, and widening fiscal imbalances all converged to weaken macroeconomic fundamentals. The banking sector, long perceived as resilient, was beginning to draw skepticism over transparency, governance, and its ability to support real sector recovery in the post-pandemic global economy.
Strategic Response: A New Vision for Monetary and Financial Stability
Faced with these challenges, Cardoso rolled out a targeted, data-driven policy framework designed to recalibrate Nigeria’s monetary path. His strategy centered around monetary tightening, exchange rate liberalization, improved financial governance, and fiscal-monetary coordination.
At the heart of this agenda is a commitment to transparency and market discipline. Less than two years into implementation, the reforms are beginning to pay dividends—both in terms of economic metrics and investor sentiment.
Reforms in Action: How the CBN is Redefining Nigeria’s Monetary Framework
1. Exchange Rate Unification: Tackling Arbitrage and Distortions
A key early reform was the unification of Nigeria’s exchange rates, a long-demanded move to end the dual-rate system that fostered market distortions and arbitrage. By allowing the naira to float more freely in a market-determined regime, the CBN promoted price discovery, eliminated artificial controls, and sent a strong signal to global markets about Nigeria’s renewed commitment to economic orthodoxy.
2. Clearing FX Backlogs: Rebuilding Credibility
Cardoso’s CBN also prioritized the clearing of the $7 billion FX backlog, settling overdue obligations to sectors like aviation, manufacturing, and foreign investors. This not only restored confidence in Nigeria’s FX payment system but also underscored the Central Bank’s credibility and willingness to honour international commitments.
3. Liberalized FX Market: Encouraging Market Participation
A return to the willing-buyer, willing-seller FX model marked another major shift. This mechanism allows market participants to negotiate rates freely, with the CBN only intervening to curb excessive volatility. The result: a more realistic exchange rate, broader market participation, and reduced reliance on informal channels.
4. Enhancing Oversight: Cracking Down on Speculation
To stem speculative activities, the CBN tightened regulation on Bureau de Change (BDC) operators, raising their capital requirements to N2 billion. In January 2025, the Bank introduced the Nigerian FX Code, establishing a framework for ethical conduct and transparency among authorized dealers. These reforms have elevated standards in currency trading and aligned Nigeria more closely with global best practices.
5. Attracting Investment: Policies That Rebuild Confidence
To reverse capital flight and attract inflows, the CBN raised benchmark interest rates, improved the ease of profit repatriation, and enhanced policy predictability. These measures are restoring Nigeria’s appeal to both foreign direct investors (FDI) and portfolio investors, reversing years of eroded confidence.
6. Recapitalizing the Banking Sector: Building Long-Term Resilience
In a move reminiscent of the transformative 2004 banking reform, the CBN in March 2024 announced new recapitalization guidelines:
- Banks with international authorization must raise their capital base to N500 billion
- National banks to N200 billion
- Regional banks to N50 billion
- Non-interest banks (national): N20 billion
- Non-interest banks (regional): N10 billion
These revised capital thresholds aim to strengthen the banking sector’s resilience and support Nigeria’s broader economic growth goals. As in 2004, this policy could again trigger consolidation, ensuring only robust institutions remain.
Reform Outcomes: Tangible Gains from the New Monetary Path
The impact of these reforms is becoming evident. Nigeria’s foreign exchange market is now more efficient and transparent. Dollar liquidity has improved. The naira, though still experiencing volatility, is now more accurately priced, and speculative pressures have eased.
Most notably, the CBN in May 2025 announced a Balance of Payments (BOP) surplus of $6.83 billion for 2024—a stark turnaround from deficits of $3.34 billion in 2023 and $3.32 billion in 2022.
The current and capital account surplus stood at $17.22 billion, driven by:
- Goods trade surplus of $13.17 billion
- Petroleum import decline by 23.2% to $14.06 billion
- Gas exports rose by 48.3% to $8.66 billion
- Non-oil exports grew by 24.6% to $7.46 billion
Remittances remained strong:
- Personal remittances up 8.9% to $20.93 billion
- IMTO inflows rose 43.5% to $4.73 billion
Meanwhile, portfolio investment more than doubled—up 106.5% to $13.35 billion, and resident FX holdings increased by $5.41 billion. External reserves also climbed by $6 billion, reaching $40.19 billion by the end of 2024.
President Tinubu, reflecting on these developments, revealed that over $30 billion in foreign investment commitments had been secured since the start of his administration—a clear affirmation of investor confidence in Nigeria’s policy trajectory.
Continental Recognition: Africa Acknowledges a Model for Reform
Governor Cardoso’s reforms have not gone unnoticed. At the 2025 African Banker Awards, he was lauded for restoring policy credibility, stabilizing the naira, and creating a more transparent FX regime. The Awards Committee described his leadership as “bold and strategic,” praising the CBN for addressing structural market imbalances and laying the foundation for sustainable growth.
“The award reflects the Committee’s recognition of Governor Cardoso’s achievements and the Central Bank’s critical role in repositioning the Nigerian economy,” the organizers stated.
The annual event attracts top-tier leaders from across Africa’s banking, financial, and development sectors—making this recognition both prestigious and highly symbolic.
A Turning Point for Nigeria: Building a Resilient Economic Future
Governor Cardoso’s tenure marks a decisive departure from the short-termism and opacity that once defined Nigeria’s monetary policy. Through decisive leadership and market-driven reform, the CBN has reasserted itself as a trusted steward of economic stability.
The evidence is compelling: a historic balance of payments surplus, growing external reserves, rising foreign inflows, and a rebuilt FX market. More importantly, Nigeria is once again being taken seriously by global markets, investors, and financial institutions.
Cardoso’s recognition as Central Bank Governor of the Year is more than a personal achievement—it is a signal that Nigeria’s reform path is working. If sustained, these policies could serve as a blueprint for monetary reform across Africa, and chart a lasting course toward macroeconomic resilience and inclusive growth in Nigeria.