The Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, says the recapitalisation policy has prompted banks to strengthen their financial positions, a process expected to result in a more robust and resilient banking sector by March 2026.
He said that the exercise, is expected to support the realisation of US$1 trillion economy in Nigeria by 2030.
He made the revelations while addressing the House of Representatives Committee on Banking in Abuja .
He also explained policy measures and strategies put in place to address domestic macroeconomic challenges in the country.
On the macroeconomic performance in 2024, he said that projections indicate a growth rate of 3.2% and 3.3% for 2024 and 2025 respectively.
He stated that Nigeria is projected to maintain a more robust 4.3% growth rate.
Cardoso said the non-oil sector maintained strong performance, contributing 94.30% to GDP with a steady 2.80% growth rate.
He noted that the oil sector’s growth rate has almost doubled to 10.15% in Q2, 2024 from 5.70% in Q1, 2024, due mainly to improved security surveillance which resulted in increased production of crude oil and natural gas.
He said the Services sector continues to be the primary economic driver, contributing 58.76% to GDP with a robust growth rate of 3.79%.
Similarly, he said the Industrial sector has shown remarkable improvement, with its growth rate surging to 3.53% from 0.31%, while pointing out that the contribution of agriculture to total GDP also increased. In addition, the growth rate of the sector rose to 1.41%, from a negative territory of -0.90%, indicating a substantial turnaround in productivity.
He also said the foreign exchange reserves have grown significantly, with remittance flows currently representing 9.4 per cent of total external reserves.
He noted that the reserves rose by 12.74% to US$39.12 billion as of October 11, 2024, from US$34.70 billion at end-June 2024, driven largely by foreign capital inflows, receipts from crude oil related taxes and third-party.
” In Q2 2024, we maintained a current account surplus and saw remarkable improvements in our trade balance”, he said.
Cardoso added that the current external reserve position can finance over 12 months of import of goods and services, or 15 months of goods only.
“In addition, we have adopted an Inflation-Targeting (IT) monetary policy framework as part of the Bank’s Enterprise Strategy (2024 2028).
“The IT framework, widely adopted across various global economies, is renowned for its effectiveness in combating persistent inflation.
“These integrated measures are aimed at stabilizing prices, optimizing liquidity management, and engendering an effective monetary policy framework.
“Regarding the foreign exchange market, the the Bank implemented various reforms including a unification strategy, which streamlined various exchange rate windows into a single model, adopting the ‘Willing Buyer, Willing Seller’ approach to enhance FX liquidity and financial market stability.
“This move was aimed at fostering transparency, reducing market distortions, and enhancing the efficiency of foreign exchange allocations.
“This consolidation involved the implementation of new operational guidelines, which included removing the International Money Transfer Operators (IMTOS) quote cap.
“Additionally, the Bank resumed the sales of FX at the NAFEM and Bureau De Change (BDC) segments, bolstered by an improved supply from Foreign Portfolio Investors (FPIs).”
Resilience
On banking supervision, he said the CBN has taken decisive actions to ensure the safety, soundness, and resilience of the banking industry.
“One of the key measures include the recapitalisation of the banking sector by raising the minimum capital base to support the $1 trillion economy envisioned by the Federal Government of Nigeria (FGN) by 2030.
“Banks are required to meet these new thresholds by March 31, 2026, with several options available for reaching these targets.
“These options include issuing of new equities, engaging in mergers and acquisitions, or adjusting their operational licenses. The Bank also revoked the licence of Heritage Bank, facilitated the successful merger of Unity Bank and Providus Bank, revised Cybersecurity Rules for Banks and PSPs, suspension of processing fees on cash deposits, and enhanced AML/CFT supervision, amongst others.”
On Monetary and fiscal policy coordination, he said they had strengthened collaboration during the period under review.
“In this regard, several joint committees have been instituted to build synergy and to provide platforms for key stakeholders’ engagements to explore ways through which monetary policy implementation and fiscal operations can be conducted in a mutually reinforcing manner.
“Overall, our policy measures reflect a holistic approach to addressing various challenges in the economy. While some measures have immediate effects, others are designed to bring about long-term structural changes. Our ultimate goal is to create a more stable, resilient, and efficient monetary and financial system that can better serve the Nigerian economy, while adhering to global best practices,”
Cardoso said the Bank’s numerous policy initiatives are yielding significant results across various sectors of the economy.
The Chairman, House Committee on Banking Regulations, Mr. Mohammed Bello El-Rufai lauded the Governor of the Central Bank of Nigeria for his relentless efforts in implementing policies aimed at stabilizing the economy.
He said the CBN Governor has faced the daunting task of steering the nation’s monetary policy amidst a challenging economic landscape.
“Under your one-year stewardship, the CBN has implemented a series of ground- breaking measures aimed at enhancing market transparency, improving financial stability, fostering a more secure investment environment, and shifting towards a market-driven exchange rate regime, to restore confidence and stabilise the economy,” he said.
He however said more needs to be done to address the economic challenges of the country.
“On the exchange rate, I must commend the CBN on the unification of the foreign
exchange market, enhancing liquidity and reducing market distortions, dearing a $7 billion backlog of valid forex, reducing forex volatility, and increasing our external reserves significantly,” he said.
He urged stakeholders to engage constructively “as we seek solutions that will enhance our monetary policy framework and ultimately support sustainable growth in Nigeria.”
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