By Christiana Ekpa
The Central Bank of Nigeria (CBN) has outlined its strategies to address the country’s spiraling inflation, according to Governor Yemi Cardoso.
The bank’s recapitalization policy aims to strengthen the banking sector by March 2026, supporting Nigeria’s vision of a $1 trillion economy by 2030.
This was just as he said the Bank’s recapitalization 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.
The exercise, Cardoso said, is expected to support the realisation of US$1 trillion economy by 2030.
He said these while addressing the House of Representatives Committee on Banking on policy measures and strategies to address domestic macroeconomic challenges.
On the macroeconomic performance in 2024, he said projections indicate a growth rate of 3.2% and 3.3% for 2024 and 2025 respectively.
He added 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 added 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%.
He pointed 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 said 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 said the current external reserve position can finance over 12 months of import of goods and services, or 15 months of goods only.
This is substantially higher than the prescribed international benchmark of 3.0 months, reflecting a robust buffer against external shocks, he said.
He said iInflation trended upward, driven largely by high food prices, cost of energy and legacy infrastructural challenges, but it commenced deceleration from 34.19% in June 2024 and to 33.40% in July 2024.
He said the moderation in inflation became more pronounced in August 2024, as headline inflation further eased to 32.15%.
This, he said, was largely attributed to monetary policy measures taken by the Bank.
With aggressive monetary policy tightening coupled with robust monetary- fiscal policy coordination, inflation is expected to further trend downward in the near-to-medium term, Cardoso said.
To combat inflation, he said they had fully reverted to orthodox monetary policy approach and implemented a comprehensive set of monetary policy measures.
These include raising the policy rate by 850 basis points to 27.25%, increasing Cash Reserve Ratios and normalising Open Market Operations as our primary liquidity management tool.
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