Nigeria Has Entered ‘Era of Renewed Stability’, Says Cardoso, As Inflation Falls, FX Market Rebounds

Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has declared that Nigeria has “turned a decisive corner” in its economic reform journey, citing a sharp decline in inflation, stabilisation of the foreign exchange market and renewed investor confidence as clear evidence that the country’s macroeconomic trajectory is improving.

Cardoso made the remarks in Lagos on Friday at the 60th Annual Bankers’ Dinner of the Chartered Institute of Bankers of Nigeria (CIBN), where he delivered an expansive review of economic reforms implemented over the past two years.

In his address, the governor said the CBN’s commitment to orthodox monetary policy, transparency and stronger regulatory discipline has begun to correct long-standing distortions in the economy.

He noted that the sharp moderation in inflation,  which fell from 34.6 per cent in November 2024 to 16.05 per cent in October 2025, reflects seven consecutive months of disinflation and marks one of the strongest improvements in price stability in recent decades.

Food inflation, he added, has also eased significantly, dropping to 13.12 per cent in October after hovering near 22 per cent earlier in the year.

According to him, the bank will continue to adjust policy tools as necessary to push inflation towards single-digit levels.

Cardoso also announced major progress in Nigeria’s foreign exchange market, describing its stabilisation as one of the most significant outcomes of the ongoing reforms.

He confirmed that the CBN has fully cleared the multi-billion-dollar FX backlog inherited by the administration, a debt estimated at more than US$7 billion, restoring market integrity and rebuilding the confidence of foreign airlines, manufacturers and portfolio investors.

He attributed the return of stability to the unification of exchange rates, the deployment of the Electronic Foreign Exchange Management System (EFEMS), and the introduction of the Nigerian FX Market Conduct Code, which together have reduced opacity, curbed arbitrage and allowed the naira to trade within a narrow range.

As a result, the gap between the official and parallel markets has fallen below 2 per cent after widening to more than 60 per cent at the height of the crisis.

Investor inflows have strengthened in tandem, rising to US$20.98 billion in the first 10 months of 2025, a 70 per cent increase over the whole of 2024.

The governor further highlighted improvements in Nigeria’s external position, noting that the country’s foreign reserves have climbed to US$46.7 billion, the highest in nearly seven years, providing more than 10 months of import cover.

He emphasised that the reserves are being rebuilt organically through improved FX liquidity, rising non-oil exports and stronger diaspora remittances, rather than through external borrowing.

On the health of the banking sector, Cardoso said that the recapitalisation exercise remains firmly on track, with 27 banks already raising capital and 16 banks meeting or surpassing the new thresholds ahead of the March 31, 2026 deadline.

Stress tests conducted during the year, he added, confirmed that the financial system remains fundamentally sound.

He also outlined new regulatory measures implemented in 2025, including stricter oversight of ATMs and POS operators, strengthened guidelines for branch closures, and a full review of Nigeria’s cash distribution ecosystem.

Cardoso described Nigeria’s recent exit from the Financial Action Task Force (FATF) grey list as another milestone, explaining that countries on the list typically experience up to a 7.6 per cent drop in capital inflows in the first year alone.

He said Nigeria’s removal from the list has already eased compliance frictions for correspondent banks and improved global confidence in Nigeria’s financial integrity.

The governor also pointed to rapid growth in Nigeria’s digital payments ecosystem and fintech sector, noting the issuance of more than 12 million contactless cards, the expansion of the regulatory sandbox to over 40 innovators, and deepening domestic interoperability across switching companies.

He reaffirmed the bank’s position that innovation will continue to be encouraged but within a regulatory framework that protects consumers and financial stability.

International rating agencies, he said, have also taken note of Nigeria’s reform momentum.

Fitch recently upgraded the country from B- to B with a stable outlook, Moody’s moved Nigeria from Caa1 to B3, and S&P revised the nation’s outlook from stable to positive, citing improved reserves and strengthened macroeconomic management.

Looking ahead, Cardoso outlined the CBN’s key priorities for 2026, including reinforcing bank resilience, deepening price stability through an improved inflation-targeting framework, expanding digital payments infrastructure, strengthening fintech governance, improving operational efficiency within the bank and enhancing local and international partnerships.

He concluded by stating that Nigeria is now “more resilient to external shocks than at any point in recent history”, due to the flexible exchange-rate regime, rising non-oil exports, growing services trade and stronger reserves.

He emphasised that the CBN will continue to operate with discipline and transparency, providing forward guidance and leveraging technology to support a more stable, inclusive and innovative financial system.

“The foundation for a revitalised Nigeria has been laid,” Cardoso said. “The journey continues, but our path is clear: disciplined policy, credible institutions and a commitment to stability.”