Cardoso: CBN Building on Existing Gains, Strengthening Institutions for Long-term Stability

In this concluding interview at the end of the IMF/World Bank Spring Meetings, Governor of the Central Bank of Nigeria, Olayemi Cardoso, spoke extensively on Nigeria’s reform agenda, the push to sustain macro-economic stability, banking sector recapitalisation, inflation management, diaspora remittances, external reserves, and ongoing efforts to strengthen institutional capacity amid a challenging global economic environment. Eromosele Abiodun and Nume Ekeghe present excerpts. 

Can you speak on what transpired at the just concluded IMF/World Bank Spring meetings? 

The Meetings provided an opportunity to take stock of Nigeria’s reform journey and reaffirm our focus on sustaining reform implementation, strengthening institutions, and consolidating macro-economic stability.

They were held amid heightened global uncertainty, characterised by tight financial conditions, subdued growth, and elevated geopolitical and financial risks. The protracted crisis in the Middle East continues to strain global markets through disruptions to energy, trade, shipping routes, and supply chains – exacerbating inflation, market volatility, and fiscal and external pressures, particularly in vulnerable, commodity-dependent economies.

Discussions facilitated peer learning on these challenges and response strategies. Nigeria’s experience indicates that spill over effects have been relatively contained, reflecting positive reform outcomes, including exchange rate stability, stronger reserve buffers, and an enhanced monetary policy framework.

Our engagements focused on sustaining reforms, strengthening financial system resilience, improving monetary policy effectiveness, and building institutional capacity – key pillars for entrenching stability and confidence over the medium term. We used all platforms to articulate our reform trajectory, reinforce policy credibility, and reaffirm our commitment to disciplined, forward-looking macroeconomic policies.

The delegation participated in key sessions, including the G-24, African Consultative Group Meeting, IMFC discussions, and bilateral engagements. As Chair of the G-24, Nigeria coordinated the Group’s affairs and advanced discussions on job-rich growth, mobilising development finance, reforming the global financial architecture, and fostering sustainable, employment-generating growth.

Since the Annual Meetings in October 2025, our message has remained consistent: sustain reforms and consolidate macroeconomic stability. Recent gains including lower inflation, FX market stability, and stronger reserves have boosted investor confidence and capital inflows.

A major milestone was the successful completion of the banking sector recapitalisation in March 2026, which raised N4.65 trillion, strengthening capital buffers, resilience, and banks’ capacity to support growth and intermediation.

The exercise attracted diversified participation, 72.55 per cent domestic and 27.45 per cent foreign – underscoring both international confidence and domestic ownership. Thirty-three banks met revised capital requirements, with adequacy ratios above Basel benchmarks, enhancing shock absorption and risk resilience. These achievements reflect our resolve to maintain a sound, well-capitalised, and competitive financial system capable of supporting Nigeria’s development ambitions in a volatile global environment. Another key outcome was Nigeria’s participation in advancing the operationalisation of the African Monetary Institute (AMI), to be headquartered in Abuja. Nigeria reaffirmed its strong institutional, political, and operational commitment to the AMI, which is a critical step toward establishing an African Central Bank and advancing monetary cooperation and macroeconomic convergence across Africa.

Additional engagements aimed at deepening partnerships included a Leadership Dialogue on Capacity Development in Africa, focused on strengthening institutional capacity and policy implementation. The CBN also signed an agreement acknowledging Nigeria’s contribution to AFRITAC West 2, reaffirming our commitment to workforce capacity building. We held bilateral engagements, including with the U.S. Chamber of Commerce’s U.S.-Africa Business Centre, enabling candid private-sector discussions on monetary and financial priorities, FX management, financial stability, and steps to deepen trade and investment ties.

These initiatives align with our broader objective of improving policy execution, institutional capacity, and long-term economic resilience. As we conclude the Meetings, our message is clear: the CBN remains firmly on track. We are focused on building on existing gains, sustaining reforms, and reinforcing institutional capacity to deliver long-term macroeconomic stability.

Inflation rate rose to 15.38 in March this year, up by 0.32% from February. The ongoing Gulf War has intensified inflationary pressures in the country, reversing earlier moderations. How is the central bank dealing with this development? 

Very good and relevant question. The recent NBS showed an uptick in inflation, which shouldn’t be too surprising given the global disruptions taking place at this time. Much of that comes from global shocks. It is also important to remind ourselves that up to this point, we had consistent deceleration in inflation. We had also begun the process of reducing rates, although we were quite cautious at the time. We did not want a situation where we eased too early and then these kinds of shocks come in to disrupt what we did. And that is exactly what happened.

There was a feeling that we would be more aggressive with reducing rates because of the several months of deceleration. But many times, members of the MPC have access to data and see things that many people do not see. There was a concern that there were shocks which weren’t too clear, but we needed to be certain. The decisions of the MPC are based on data. This is not something anybody is emotive about. It is what the data tells us that we react to. I am pleased that at least that decision has been borne out things have played out. If not for the steps we had taken at the time, and if not for the reforms that had been embarked upon when we did, I think the outcome for the country would have been a lot more difficult and painful.

As a result of global shocks, we are not relenting on continuing to build resilience and to stay the course with respect to bringing down inflation to single digits. We will stay that course because it ties in with the issues of concern to Nigerians, particularly how people feel the impact of recent developments. Stability has begun to set in, so some of the negative consequences of instability are behind us.

Following the meetings you have had this week, could you give us the major takeaways, especially on Nigeria and for the CBN? 

On the takeaways from the meetings, I have always been of the view that the World Bank/IMF meetings are a very good opportunity for us to tell our story. If we don’t tell our story, it either doesn’t get told or is told in a way that is not reflective of what has truly transpired.

It is not a place where we just come and go back. It is a place where we interact, meet leadership of institutions, and use the opportunity to clarify and amplify what Nigerian monetary and fiscal authorities are doing. The responses we have been getting on this trip have been to commend the bold but necessary reforms taking place by the Nigerian authorities. It also provides a platform to engage with peers in other countries facing similar or even worse challenges, and to learn how they have managed crises and how we can build alliances relationships with other countries. 

There were closed-door meetings where central bank governors and finance ministers had detailed conversations. One interesting issue discussed was the impact of AI globally. It was said that if AI is properly implemented, up to 40 per cent of jobs may be lost. That is a staggering statistic and requires preparation. On the flip side, there were discussions about what happens if huge investments in AI fail. The consequences could be far-reaching for banks, private credit, and the broader system. There was also discussion on heightened geopolitical and financial uncertainty and its likely impact, depending on how long it persists, and the responses required from institutions like the IMF. The issue of creating buffers was also stressed. If buffers were not created earlier, it becomes more challenging. In Nigeria’s case, we have created buffers that have helped minimize volatility. When tariffs emerged and many emerging market currencies were hit, we did not experience that significantly. That reflects prudent and well-implemented policies.

On policies, it was emphasised that at a time like this, you must be very careful in deploying policies because wrong moves can have far-reaching implications. On rating agencies, we have had good discussions. We have reaffirmed our commitment to stay the course. The numbers speak for themselves. Rating agencies have supported the reforms, and we have continued to clarify and give them confidence that results of reforms are beginning to show. First, on the newly signed memorandum of understanding with IMF AFRITAC, I would like to know more about that and how it would sharpen institutional capacity of the central bank. Secondly, the African Monetary Institute, which you alluded to earlier, how does Nigeria expect to extract maximum value from that institute? On IMF AFRITAC and institutional capacity building, this is very dear to me. The key thing in the macroeconomy and fiscal space is people. Just as we build financial buffers, we must build capacity buffers.

Things are changing every day, AI, digital assets, crypto and we must ensure access to the best capacity-building efforts for our people managing these risks. We have already benefited from AFRITAC, but we felt it necessary to formalize the collaboration through an agreement, making clear where we are headed and how to collaborate better. They bring insights from different countries, which is valuable. These investments will not bear fruit overnight, but we must invest in people continuously, so they are prepared to defend the institution when challenges arise. On the African Monetary Institute, we are proud it is located in Abuja. It aligns with our capacity-building efforts. We already run programs bringing participants from across Africa, and we will sustain that. Having the institute here advances that effort, and in the future, when discussing an African Central Bank, it will provide further momentum.

Banking sector recapitalisation has been concluded, what happens to the five banks pending? 

On the bank recapitalisation, Nigeria has moved on. When we made this announcement over two years ago. It appeared as if this was just high in the sky and it will never happen, but it happened, and it has happened very well indeed. Roughly, 72.55 per cent domestic, 27.45 per cent foreign. Recall that we have been talking about investor confidence. That is a very strong reflection of domestic investor confidence and foreign investor confidence. It is really big, and I don’t want us to take it lightly. We look at these things as if it’s just one of those things. It isn’t. And honestly, when we share this kind of data with various colleagues who have come to the meetings, they are very pleasantly surprised that we have been able to accomplish the things we have in this sector. Yes, there are some particular banks, and we mentioned them, and we are very specific in saying that they were going through various forms of regulatory and legal issues, and that in the fullness of time, they will also join the group of those that have been fully capitalised to the level that the regulations require. To be fair to them, when this announcement was made over two years ago, a number of these banks had issues that came about after that, so you cannot, therefore apply the same time horizon as you apply to others. But as I had said in that announcement, once and when those issues are resolved, then we expect that they will be able to meet the requirement. And as at now, business is going on as normal in those banks.

During our first meeting with you as CBN governor you announced your target from Diaspora Remittances, where are we now and what is the target? 

The target is $1 billion per month by the end of the year. Where are we now? Roughly at about $600 million per month. We had a very big event a couple of weeks ago, when the President visited the UK on an official visit. At that time, we engaged the diaspora extensively, because obviously, London is a very critical point for diasporas. We have done the US a couple of times but more importantly, I make bold to say that the central bank has done a lot of the work that should now enable the process to work through the banking system. So, what we’re doing now is encouraging the banks to come up with products. Some of these banks have presence in the UK, in the US. They know who the diasporas are. We are not a retail bank; we are a central bank. So, all we have tried to do is create that enabling environment, take out the bottlenecks that will ensure that the Diasporas can work through the system seamlessly. And that’s why we are enabling them with BVN, and that came about was by listening, understanding that there were problems, and seeing how to take those problems out, and of course, the IMTOs, bringing them into the fold. 

So, from our perspective, we have done much. What we now need to do is get the banks to step in and encourage their customers to be more willing to use that process. What I see so far is quite encouraging, and perhaps what is happening worldwide is giving impetus to a lot of the diasporas to look back to where they are coming from. I think that particular initiative is very timely.

Recently there has been some decline in reserves, is the CBN worried and how can this tide be reversed? 

On the decline in reserves, and whether there is any cause, the answer to that is there isn’t. It is normal. And beyond it just being normal, we already have way beyond what the IMF even recommends having as a minimum reserve level. I think we’re about 13 months now, okay, so we’re way beyond, we’re in a very comfortable position. So, it’s normal, it will happen, and honestly, there’s nothing to worry about. 

In fact, if there is anything that worries me, it isn’t so much that the reserves are decreasing or anything, but I get concerned when I see the reaction of Nigerians to a small swing here, a small swing there. And I feel the days of doing that are gone. The foreign exchange system that used to operate in those days is very different from what it is now.

Then you had a central bank that was primarily the only one that determines that market. That is different now. Now its market driven. 

There is more liquidity in the market. There’s confidence. Investors come in and go out as they like. So why do you want to worry about something that happens relatively modestly on the road of travel. But I guess that will take time for people to understand that issue better, and we must keep explaining it and letting people know. The market is so liquid that it operates on its own. So, in a situation like that, the reserve level is a great thing to have, but focusing on that when you have such a huge liquidity in the market is less relevant than it was about three years ago.