Following my last episode on the impact of CBN’s Monetary Policy and the need for the apex bank to get tougher in its regulatory policy on banks, some readers sent me creepy messages accusing me of supporting the APC government. Well, I see the monetary policy of the CBN from Cardoso’s viewpoint and not from the eyes of those who do not want the country to succeed because they dislike Tinubu and APC.
Our criticisms and condemnations must not be reserved for the people in government or the institutions. When someone, a team, or an institution of government is doing well, we must commend and encourage them. That is not sycophancy but getting the sense of an adult and standing up for your country. This does not mean that the Naira is completely out of the woods or has found its real level. Far from it. As the currency continues to swing high and low, one certain thing is that a strong Naira is crucial to a strong economy and strong national security. Safeguarding the Naira is therefore, equivalent to safeguarding the soul of our nation.
For the above, I would like to encourage Oluyemi Cardoso, the CBN Governor, and his team for their unwavering efforts in promoting financial stability in Nigeria.
I believe that the policies being implemented have helped to improve the confidence of investors in the Nigerian economy. Such policies as helping the airlines offset their huge foreign debts, providing tax incentives, and streamlining the investment process makes foreign direct investment attractive.
I also believe that the CBN’s efforts in reducing the cash economy have been successful, and I’d like to commend the governor and his team for their laudable initiatives.
The Central Bank of Nigeria (CBN) plays a vital role in promoting economic growth in Nigeria through various measures. The CBN uses monetary policy tools to promote economic growth by controlling inflation and maintaining price stability. This is achieved through the management of interest rates, reserve requirements, and other monetary policy instruments
The Central Bank of Nigeria (CBN) has been working tirelessly since the appointment of Cardoso in September 2023 to stabilise the naira, and its efforts are finally paying off. Despite the numerous challenges facing the Nigerian economy, the CBN’s tight regulatory policies have helped to strengthen the naira, improve market efficiency, and boost investor confidence.
An important key factor contributing to the naira’s stability is the CBN’s decision to unify the foreign exchange (FX) market. By eliminating multiple exchange rates and ensuring price discovery, the CBN has helped to reduce speculative instincts and arbitrage opportunities. This, in turn, has led to a significant reduction in the gap between the parallel and official exchange rates.
According to a recent report, the difference between the parallel and official rates has dropped to less than one per cent. This is a significant improvement from the 10-20 per cent gap that existed previously. The reduction in the exchange rate gap is a clear indication that the CBN’s policies are working.
Another key factor contributing to the naira’s stability is the improvement in Nigeria’s balance of trade. The country’s balance of trade has risen to $18.6 billion, the highest level in years. This means that Nigeria is now exporting more and importing less, which is a positive development for the economy.
The improvement in the balance of trade is largely due to the CBN’s efforts to promote exports and reduce imports. By making it more expensive for importers to access foreign exchange, the CBN has encouraged businesses to focus on exporting goods and services. This has helped to boost Nigeria’s export earnings and reduce its reliance on imports.
The CBN’s policies have also helped to attract foreign investment into the country. Foreign portfolio investors have brought in about $10 billion, while corporates have invested $9.7 billion. The investors and investments that brought in $10 billion in Nigeria are not explicitly stated in the available information. However, it’s mentioned that President Bola Tinubu aims to raise at least $10 billion to increase foreign exchange liquidity, stabilize the naira, and grow the economy. The funds are expected to come from various sources, including foreign portfolio investors, corporations, and the Central Bank of Nigeria (CBN) itself. For instance, foreign portfolio investors have already brought in about $10 billion, while corporates have invested $9.7 billion. This influx of foreign investment has helped to boost the naira and improve market liquidity.
Furthermore, the CBN’s efforts to settle foreign portfolio inflows and repay blocked funds for airlines have helped to improve investor confidence. By ensuring that investors can repatriate their funds easily, the CBN has sent a positive signal to the market that Nigeria is committed to attracting and retaining foreign investment.
Despite these positive developments, there are still challenges facing the Nigerian economy. The country’s reliance on oil exports makes it vulnerable to fluctuations in global oil prices. Additionally, the economy is still recovering from the impact of the COVID-19 pandemic.
However, the CBN’s policies have helped to mitigate these challenges and promote economic growth. By maintaining a stable exchange rate, promoting exports, and attracting foreign investment, the CBN has helped to create a favourable business environment that supports economic growth and development.
In conclusion, the CBN’s policies have been instrumental in stabilizing the naira and promoting economic growth. By unifying the FX market, improving the balance of trade, and attracting foreign investment, the CBN has helped to create a favourable business environment that supports economic growth and development.
As the Nigerian economy continues to evolve, it is essential that the CBN remain committed to its policies and continues to work towards promoting economic growth and development. By doing so, the CBN can help to ensure that the naira remains stable, and the economy continues to grow and prosper.
The CBN’s success in stabilizing the naira is a testament to the bank’s commitment to promoting economic growth and development. As the economy continues to evolve, it is essential that the CBN remains vigilant and continues to work towards promoting economic growth and development.
Moving forward the Central Bank must continue to improve transparency and communication: This cannot be overemphasized. CBN should improve transparency and communication with stakeholders, including investors, businesses, and the general public. This will help to build confidence in the Naira and reduce speculation.
The CBN should continue to implement policies aimed at reducing inflation, such as increasing interest rates and reducing money supply. Low inflation will help to maintain the value of the Naira. The measures may seem tough and complex but are necessary.
To say that Nigeria is a mono-economy with all the riches God has blessed us with is distasteful to the ear. The CBN should work with the government to diversify the economy, reducing dependence on oil exports and promoting other sectors such as agriculture, manufacturing, and services. This will help to reduce the impact of external shocks on the Naira. For instance, the coming up on stream by the Dangote Refinery and the prospects of other refineries managed by NNPCL will drastically reduce foreign exchange pressure
The CBN should continue to maintain a stable banking system, ensuring that banks are well-capitalized and liquid. This will help to maintain confidence in the financial system and reduce the pressure on the Naira.
The CBN should closely monitor and regulate the parallel market to prevent speculation and ensure that the exchange rate reflects the true value of the Naira.
The CBN should collaborate with the government to implement policies that promote economic growth and stability, such as investing in infrastructure, promoting entrepreneurship, and improving the business environment.
