CBN’s Reforms Bolstering Economy’s Resilience, Rekindling Growth Prospects

Some of the reforms introduced by the Central Bank of Nigeria are serving as buffers against global economic shocks, helping to sustain confidence of investors and raising growth prospects, writes Ayodeji Ake

The reforms instituted by the Olayemi Cardoso-led Central Bank of Nigeria (CBN) have  prepared the nation’s  economy to withstand tough times brought by global headwinds, by creating buffers that safeguard its resilience. Global and domestic business leaders recognised that Nigeria is now well positioned to withstand external shocks and sustain confidence of investors. The stability exchange rate and continued inflows into external reserves present great opportunity for economic resilience and sustained growth.
The Nigerian economy has experienced major transformation in recent years, following reforms in the sector. From exchange rate unification, increasing regulatory guidance, improved transparency in the forex market operations to enhanced surveillance in financial flows to the economy, which  have all led to sustained growth.
A large part of these reforms and policy implementations have brought significant benefits to the economy including providing buffers for stability and growth.
A major milestone is that despite headwinds necessitated by the ongoing Middle East crisis, the Nigeria economy remains sound and able to attract global investors.
The investors have continued to scramble for Nigerian assets as the impact of the CBN reforms in the financial sector spreads to key segments of the economy.

How it started

The CBN had embarked on a series of bold reforms to attract more foreign capital to the economy, achieve price and exchange rate stability. Over two years ago, the new administration and the CBN, led by  Cardoso,  liberalised the foreign exchange market, stopped central bank financing of the fiscal deficit, and reformed fuel subsidies. The government also strengthened revenue collection and took strategic steps to reduce surging inflation rate.
Since these reforms were implemented, international reserves have increased, and people can now access foreign exchange in the official market.
Besides, Nigeria successfully returned to international capital markets last December and was recently upgraded by rating agencies. A new domestic, private refinery is positioning Nigeria up the value chain in a fully deregulated market.
CBN’s policies, including the currency reforms, led to investment inflows from abroad, and reduced interventions in the domestic forex market.
The unification of exchange rates and the clearing of over $7 billion FX backlog raised the country’s investment outlook, with multilateral organisations, like the World Bank, describing it as bold intervention to improve the economy’s sustainability in the long run.
Also, Nigeria’s sovereign risk spread has fallen to the lowest level since January 2020, erasing the premium accumulated during the pandemic and subsequent strain on its economy. All these are deliberate efforts to woo investors and sustain capital inflows to the economy.
Cardodo explained that in addressing Nigeria’s economic challenges, collaboration is key.
 “Managing disinflation amidst persistent shocks requires not only robust policies but also coordination between fiscal and monetary authorities to anchor expectations and maintain investor confidence. Our focus must remain on price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and ease economic hardship,”  he said.
The CBN also focused on strengthening the banking sector, introducing new minimum capital requirements for banks (effective March 2026) to ensure resilience and position Nigeria’s banking industry for a $1 trillion economy. These reforms and developments reflect the bank’s commitment to creating an enabling environment for inclusive economic development.
However, achieving macroeconomic stability requires sustained vigilance and a proactive monetary policy stance.
“As we shift from unorthodox to orthodox monetary policy, the CBN remains committed to restoring confidence, strengthening policy credibility, and staying focused on its core mandate of price stability,” Cardoso stated.
Continuing, he said monetary policy easing became necessary following a review of macroeconomic developments.
According to him, the decision by the Monetary Policy Committee (MPC) to ease the policy stance was made in the light of improving inflation trends.
“The committee’s decision to lower the monetary policy rate was predicated on the sustained disinflation recorded in the past five months, projections of declining inflation for the rest of 2025 and the need to support economic recovery efforts,” Cardoso said.

Rising foreign capital inflows

Cardoso recently announced that Nigeria makes roughly $600 million monthly from Diaspora remittances inflows to the economy. He said Nigeria’s experience indicates that spillover effects have been relatively contained reflecting positive reform outcomes, including exchange rate stability, stronger reserve offers and an enhanced monetary policy framework.
He said recent gains, including lower inflation, FX market stability and stronger reserves, have boosted investor confidence and capital flows.
Cardoso noted  that within the banking sector, the sector remains robust with key indicators reflecting a resilient system.
To ensure that our banking system can effectively support the growth of our economy, efforts to strengthen banks’ capital buffers were announced in 2023 with a two-year implementation window.
“I am pleased to note  the  banks have raised the required capital through right issues and public offerings. I believe that the banking sector is in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMEs and supporting investment in critical sectors of our economy,” he said.

X-raying the economy

The Global Economic Prospects report of the World Bank upgraded Nigeria’s economic growth forecast for 2026 to 4.4 per cent, from the 3.7 per cent projection it had announced for the country in June 2025.
The report said: “Growth in Nigeria is forecast to strengthen to 4.4 per cent in both 2026 and 2027—the fastest pace in over a decade. This further firming of growth is anticipated to be underpinned by a continued expansion in services and a rebound in agricultural output, with a modest acceleration in non-oil industry.
“Economic reforms, including in the tax system, along with continued prudent monetary policy, are expected to continue supporting activity. They are also expected to improve investor sentiment and reduce inflation further.
Higher oil output is expected to offset lower international oil prices this year, helping to boost fiscal revenues and strengthen the external balance.”
The apex bank appeared to have set the ball rolling in terms of forecasting positive economic outlooks for the country, when in its macroeconomic outlook for 2026, released last month, it made optimistic projections for the nation’s economy.
The apex bank stated: “The year 2026 presents a realistic window of opportunity for macroeconomic stabilisation. The Nigerian economy is expected to continue expanding, with growth projected at 4.49 per cent in 2026. The projection is hinged on continued gains from broad-based structural reforms and a gradually easing monetary policy stance.

Growth Prospects for Sub-Saharan Africa

The World Bank said Sub-Saharan Africa would achieve 4.1 per cent growth this year. It also listed risks stalling growth in the region.
In its  Africa Economic Update, it said geopolitical risks—including the conflict in the Middle East, high debt service burdens and longstanding structural constraints, continue to weigh on the region’s capacity to accelerate growth and create jobs.
The report, formerly titled Africa’s Pulse, finds that growth for 2026 in Sub-Saharan Africa is holding at 4.1 per cent, the same pace as in 2025, but downside risks are mounting. Rising fuel, food, and fertilizer prices, alongside tighter financial conditions, are likely to push inflation higher, disrupt economic activity, and disproportionately affect the most vulnerable households which spend a larger share of their income on food and energy.
“In the short term, governments should target scarce resources to protect the most vulnerable households. At the same time, maintaining macroeconomic stability—by controlling inflation and exercising prudent fiscal management—will be essential to navigate the current shock and position African countries for a faster recovery once the crisis subsides,” World Bank Group Chief Economist for the Africa Region, said Andrew Dabalen, said.
High public debt and rising debt service costs continue to limit countries’ ability to fund development priorities and invest in foundational infrastructure needed to create more and better jobs.

Nigeria faces lower risks over M’East crisis

Nigeria and other countries able to export oil and gas without hitches despite the ongoing Middle East crisis will face the smallest headwinds or risks, the Managing Director, International Monetary Fund (IMF), Kristalina Georgieva, has said.
A report, “How the Middle East War Has Affected Oil Exporters and Importers”, released at the weekend, explained her position, highlighting  that countries directly hit by the conflict, including major oil and gas exporters in the Middle East, bear the brunt of the impact.
The report explained that countries face vastly different exposure to higher oil prices and supply uncertainty, shaped by whether they import or export, and how much policy space they have to respond.
Already, the war in the Middle East has disrupted oil and gas flows and darkened the global economic outlook.
“So, do oil-importing nations where imports loom large as a share of gross domestic product. How severe that burden becomes for these importers depends critically on their policy space, proxied in the charts below by their sovereign credit ratings,” the report said.
Explaining that most countries are net oil importers, the Fund said the war’s direct hits have fallen heavily on exporters, adding that the shock is global, but the burden is uneven.
In her Spring Meetings curtain raiser speech, Georgieva, said a resilient world economy is being tested again by the war in the Middle East.
“The conflict has caused considerable hardship around the globe. My heart goes out to all people affected by this war and all wars.
Our focus remains on how best to weather this latest shock and ease the pain on economies and people. This requires understanding the nature of the shock, the channels through which it affects the economy, the size of the impact, and the policies that can mitigate it,” she said.