A year ago, circumstances threw him up as Nigeria’s 12th Governor of Central Bank of Nigeria. Mr. Olayemi Cardoso was intentional on the path to lead the apex bank. While being prodded by the Senate’s screening committee, Cardoso unequivocally pledged, amongst others, to refocus CBN through reforms.

He told the Senate members screening him for confirmation that his blueprint of reforms would be in phases, comprising short, medium, and long-term measures.

He assured that the bank under his watch would operate transparent monetary policies with respect to data. Cardoso, in addition, stressed that his administration would not tolerate the errors made by past leadership of the bank.

CBN, under his watch, he added, would comply with all constitutional duties and ensure that the financial policies of the country are of international standard.

Restoring confidence

Nigeria is a monolithic petrol dollar economy. The larger chuck of resources comes from the sale of crude oil earned in dollars. Shock waves, like crashes in crude oil prices and low production, put the country’s economy in panic.

With oil price collapse, foreign exchange began to dwindle. Over time, the country was in a difficult time, unable to meet dollar repatriation requests by foreign investors. The governor inherited a backlog of uncleared dollars in arrears owed to foreign investors.

This gave rise to investors’ apathy. In a recap, Cardoso said: “We had a situation where the response to excess money supply, the little foreign exchange available, was to fix exchange rates, which now resulted in multiple exchange rates and arbitrage opportunities between one and the other.

“And of course, this in itself resulted in a backlog of foreign exchange. It was a complex situation. Sometimes people forget that this is the context in which we came into the cycle of the central bank.

“So, it’s just what it is. In all this, the encouragement for people to transact in a market has got to be when the confidence has been built up. And we believe that that’s what we have been able to do through clearing the backlog of $7 billion that I mentioned earlier.

“And we are transparent in operations, which by the way includes what we are doing here,” he said. He said with consistent clearing of verified forex exchange backlog, investor confidence had been restored.

Exchange rate Over time, the CBN operated a controlled foreign exchange rate, a development that gave rise to forex price arbitrage.

The system was manipulated and abused by the few opportunities who secured forex at a government-controlled exchange rate, only to roundtrip it at the black market.

On taking CBN leadership, he floated the naira against the dollar essentially to combat currency speculation. “It was a tough decision to take,” the CBN governor recently admitted.

Addressing members of the Harvard Club of Nigeria in Lagos last weekend, he shed light on factors that informed his decision on floating the naira.

He said at the event themed “Leadership in Challenging Times: Restoring Credibility, Building Trust, and Containing Inflation,” that floating naira had become inevitable to restore market trust and combat speculation.

Cardoso said the disparity between the official and paral – lel rates had encouraged arbitrage and speculation, eroding trust in the market. He insisted that without credibility, no policy, however, well-intentioned, could succeed.

According to him, “credibility is earned by consistency. The decision to close this gap, while painful in the short term, sent a message to market participants that the CBN was committed to transparency and sound monetary policy.”

He pointed out that speculative trading had been minimised while stability was gradually returning to the currency markets. “Trust is the currency of central banking. If the public loses trust in the institution, the efficacy of its policies diminish. Our decision to implement the Electronic Foreign Exchange Matching System (EFEMS) is rooted in this un

Trust is the currency of central banking. If the public loses trust in the institution, the efficacy of its policies diminish

derstanding. By enhancing transparency and providing more accurate oversight of forex transactions, we send a strong signal that the CBN is serious about fair and efficient markets.

“In the face of economic challenges, it is imperative to focus on core objectives—restoring the credibility of the institution, building trust in the financial system, and, most critically, containing inflation.

These are not just strategic goals; they are foundational to any meaningful recovery,” he said over the weekend, while defending CBN’s action on floating the naira, a decision that has seen naira exchanged for over N1600 to $1.

$1 trillion economy target

The current administration’s $1 trillion economic target by 2030 depends largely on the banking sector’s contribution. To realise the target, CBN announced a new re-capitalisation threshold for the category of banks.

The deadline for meeting a new capital base has been fixed. Banks have swung into action in their bid to cross CBN’s new re-capitalisation policy. On several occasions, Cardoso reaffirmed the bank’s commitment to implementing policies that foster sustainable growth in the financial markets while ensuring overall economic stability.

He noted that given the vital roles played by banks and other financial institutions, banks must be re-capitalised in order to drive the process of achieving the $1 trillion economy target by 2030. “The ongoing recapitalization efforts in the banking sector are focused on enhancing financial stability and driving progress toward reaching a $1 trillion economy by 2030,” he said.

Orthodox banking

Cardoso decided to wean apex from its none-core mandates and other sundry interventions it got involved in the past. At the peak of the COVID-19 , the bank strayed into interventions in attempts to shield the economy from COVID-19 perils.

On assumption as CBN governor, Cardoso reversed unorthodox roles of the bank. He restricted it to its primary mandates. He said: “We decided it was important to refocus the mandate of the central bank to orthodox.

We are fully engaged in getting ourselves out of unorthodox means of running the central bank. And I’ve spoken about this on several occasions. It is all part of focusing on a core mandate, which essentially is to moderate prices.”

Rising inflation

Ensuring price stability and slowing headline inflation were commitments given by Cardoso while being screened by the Senate last year. To achieve the objective of reduced inflation, the bank resorted to sustained tightening of the lending rate since Cardoso assumed office.

Inflation had yet to ease down to a tolerable level, but there has been deceleration in its pace. During last month’s Monetary Policy Meeting, CBN hiked the lending rate by 50 basis points to 27.25 per cent from the previous 26.75 per cent, while inflation, for the first time, eased down to 32.15 per cent in August relative to the July 2024 inflation rate of 33.40 per cent.

Explaining reasons for the continuous upward trend in inflation amidst continuous tightening measures by CBN, Cardoso said: “This is something I’ve said before, and I’m not tired of saying it: that we are resolute in our focus on bringing down inflation.

We will use all the tools at our disposal to ensure that that happens. We are not going to spare any effort in doing that. “The numbers clearly show that we are heading in the right direction.

The fact that we are seeing the reductions and the decimation in inflation over the course of the last month and a half is clearly the reason. However, we are not out of the woods yet. And we really cannot take any chances.

“You mentioned the issue of inflation. Truly, we have been able to have an ongoing dialogue with other stakeholders over a period of time to ensure that the food component moderates, and we hope that will continue to be the case.

But it’s also clear that there are other factors that are engaged in both prices and public demand that need to be focused on. Indeed, we intend on doing exactly that.

“And that is the reason why we have taken the stance that we have taken—to tighten, to continue to do so until we bring this under control,” he said, adding that “as far as I know, there is no economic model that tends to take people out of poverty when inflation is accelerating at the levels that we are seeing.”

He attributed rising inflation, especially the food component, to escalation in bandits’ attacks on farmers across foodproducing belt zones.

Last line

One year down the line, Cardoso has been able to achieve some of the targets he set out, though there are still areas to be attended to.

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