Nigeria’s apex bank, the Central Bank of Nigeria (CBN), has been awarded Central Bank of the Year by Central Banking Magazine, in recognition of wide-ranging reforms credited with restoring macroeconomic stability and rebuilding investor confidence.
The accolade highlights what the publication described as a decisive “return to policy orthodoxy” under CBN Governor Olayemi Cardoso, whose leadership has marked a turning point for the country’s monetary and financial system after years of policy inconsistencies.
From Crisis to Stability
According to the magazine’s assessment, Nigeria’s economy had been under significant strain prior to the reform push, with soaring inflation, a sharply depreciated naira, dwindling foreign exchange reserves, and weakened investor sentiment.
These pressures were compounded by structural inefficiencies, including multiple exchange rate windows, an FX backlog estimated at about $7 billion, and heavy reliance on monetary financing.
Reforms Reshape FX and Monetary Policy
Since assuming office in October 2023, Cardoso’s team has implemented a series of aggressive reforms aimed at restoring transparency and credibility. Central to this effort was a comprehensive overhaul of the foreign exchange market, including the adoption of a willing-buyer, willing-seller framework and the rollout of an electronic FX matching system.
These changes helped eliminate distortions and significantly narrow the gap between official and parallel market exchange rates—from more than 60 percent to under two percent—while improving liquidity and investor confidence.
The CBN also cleared outstanding FX obligations, a move widely seen as critical in rebuilding trust among foreign investors and businesses operating in Nigeria.
Inflation Control and Reserve Growth
On the monetary front, the bank pursued an aggressive tightening cycle to rein in inflation, raising interest rates sharply before gradually easing as price pressures began to subside. Inflation, which peaked above 34 percent in 2024, has since moderated to around 15 percent by early 2026.
At the same time, Nigeria’s external reserves rebounded strongly, rising to approximately $46.7 billion by late 2025—the highest level in nearly seven years—providing more than 10 months of import cover.
Institutional and Financial Sector Reforms
Beyond monetary measures, the CBN introduced sweeping institutional reforms, including curbing quasi-fiscal interventions, strengthening regulatory oversight, and improving transparency in policy communication.
A major pillar of this effort is the ongoing bank recapitalisation programme, designed to bolster the resilience of the financial sector. Many lenders have already met the new capital requirements ahead of the March 2026 deadline, signaling improved sectoral strength.
The magazine also pointed to enhanced financial system integrity, noting Nigeria’s removal from the Financial Action Task Force grey list and positive evaluations from institutions such as the International Monetary Fund.
Challenges Remain
Despite the progress, the publication cautioned that sustaining disinflation, completing banking sector reforms, and strengthening institutional capacity remain key challenges.
Nonetheless, it concluded that the CBN’s policy actions over the past two years have been “nothing short of remarkable,” positioning Africa’s largest economy on a firmer path toward long-term stability and sustainable growth.