The Central Bank of Nigeria (CBN), on Friday, marshalled out indices, depicting improved growth and stability of the country’s economy, noting that the planned stability, would make Nigeria hit a $1 trillion economy by 2030.
This was as the Governor of the apex bank Olayemi Cardoso, raised the hope of the already heavily discouraged Nigerians, assuring them of better days in the near future.
Governor Cardoso spoke on the growth and economic stability indices during statutory engagement with the Senate Committee on Banking, Insurance and other Financial Institutions.
He outlined the CBN’s mandate and provided an in-depth analysis of Nigeria’s economic performance, recent policy measures, and the outlook for the remainder of the year 2024.
He recounted that since assuming duty in October 2023, the Bank’s management had concentrated on stabilising the economy, restoring confidence in financial markets, and establishing a foundation for sustainable growth.
Some key focus areas he highlighted, included curbing inflation, stabilising the exchange rate, enhancing financial sector supervision, promoting financial inclusion, and increasing transparency in monetary policy decisions.
According to him, the resilience of the Nigerian economy in the first half of 2024, gave a a growth rate of 2.98% in the first quarter, up from 2.31% during the same period last year.
He emphasised that the Services sector was the main economic driver, contributing 58.04% to GDP with a growth rate of 4.32%. He noted that the Industrial sector also showed improvement, achieving a growth rate of 2.19%.
On the persistent inflationary pressures, with headline inflation rising from 29.90% in January to 34.19% in June 2024, he noted that the pace of monthly increases had moderated, suggesting the effectiveness of the Bank’s anti-inflationary measures.
He also highlighted the significant narrowing of the spread between official and BDC rates, indicating successful price discovery and reduced arbitrage opportunities.
“The spread between official and BDC rates has narrowed significantly from N162.62 in January to N47.22 in June 2024, indicating successful price discovery, increased market efficiency, and reduced arbitrage opportunities.
“The stock of external reserves increased to US$36.89 billion as of July 16, 2024, compared with US$33.22 billion at the end of December 2023, driven largely by receipts from crude oil-related taxes and third-party receipts.
“In Q1 2024, we maintained a current account surplus and saw improvements in our trade balance. Our external reserves level as of end-June 2024 can finance over 11 months of import of goods and services, or 14 months of goods only.
“This is significantly higher than the prescribed international benchmark of 3.0 months, indicating a strong buffer against external shocks.
“The banking sector remains robust and diverse, comprising twenty-six commercial banks, six merchant banks, and four non-interest banks. Key indicators such as capital adequacy, liquidity, and non-performing loan ratios all showed impressive improvements, underscoring the sector’s growing stability and resilience.
“The equity market has shown impressive performance, with the All-Share Index rising by 33.81 per cent and market capitalization expanding by 38.33 per cent from December 2023 to June 2024, reflecting growing investors’ confidence.
“While we are encouraged by these positive trends, the CBN remains vigilant and committed to implementing policies that support sustainable growth in our financial markets, while maintaining overall economic stability.”
He added by assuring the committee members, that required measures and strategies have been mapped out to confront emerging challenges.
“To combat inflation, we have implemented a comprehensive set of monetary policy measures. These include raising the policy rate by 750 basis points to 26.25 per cent, increasing Cash Reserve Ratios, normalizing Open Market Operations as our primary liquidity management tool, and adopting Inflation Targeting as our new monetary policy framework.
“In the area of banking supervision, the CBN has taken decisive actions to ensure the safety, soundness, and resilience of the banking industry. Key measures include intervention in three banks, revocation of Heritage Bank’s license, increasing minimum capital requirements, and enhancing AML/CFT supervision.
“We also introduced new frameworks for Cash Reserve Requirements and cybersecurity and prohibited the use of foreign currency collaterals for local currency loans. We are in the process of reviewing the Bank’s micro and macroprudential guidelines to reinforce the resilience of financial institutions in Nigeria to withstand tightened conditions, thus creating a secure and attractive investment climate.
“We have signalled our plans to re-capitalize deposit money banks in Nigeria to improve capital inadequacy and their capacity to grow the economy. Our ultimate goal is to create a more stable, resilient, and efficient financial system that can better serve the Nigerian economy while adhering to international best practices,” he said.
In his opening remarks, the Chairman of the Committee, Senator Adetokunbo Abiru (APC Lagos East), lauded the CBN Governor and his team for their efforts to stabilise the economy since taking office.
