Dr. Bunmi Bajomo, Head of Group Corporate Banking at Ecobank Transnational, highlighted three key sectors in Nigeria that are significantly benefiting from the foreign exchange (FX) reforms initiated by the Central Bank of Nigeria (CBN). These insights were shared during the Nairametrics’ 2024 Q4 Economic Outlook webinar, titled “Nigeria’s Economic Outlook 2025,” which focused on “Exchange Rates, Interest Rates, Economic Growth, and Geopolitics.”
Bajomo noted that while many Nigerians have experienced some benefits from the FX reforms, certain sectors, particularly exporters, have been able to leverage these market changes to their advantage. She explained that the CBN’s reforms as of April 2024 had narrowed the gap between the official and parallel markets to less than 1%, a significant improvement from the previous year when the discrepancy was much larger.
The FX reforms have also enhanced liquidity, which had been a major issue before the current administration took office. Bajomo identified exporters as one of the primary beneficiaries of the reforms. She emphasized that aside from petroleum, agricultural products like cashews, cocoa beans, and rubber are making a notable impact on Nigeria’s trade position. The devaluation of the Naira has improved the competitiveness of Nigerian exporters, allowing them to sell their products more effectively in dollar terms.
The financial industry, particularly banks, is the second sector benefiting from the FX reforms. Bajomo mentioned that the CBN’s transition to an updated Cash Reserve Ratio (CRR) regime has allowed banks to better manage their liquidity, providing relief for the financial sector.
The second sector Bajomo believes has benefited from the FX reforms is the financial industry, particularly banks.
She mentioned that in February this year, the CBN transitioned from daily arbitrary debits in terms of the Cash Reserve Ratio (CRR) to an updated CRR regime.
CRR is the percentage of customer deposits that commercial banks are required to keep in reserve with the CBN or as cash.
She explained that the updated CRR adjustments allow banks to effectively monitor, plan, and align their positions with the CBN, thereby freeing up liquidity.
“So, the ability to effectively calculate what your CRR is a major relief for the financial sector,” she said.
The manufacturing sector is another area that has seen improvements due to the reforms. Previously, manufacturers faced challenges with trapped cash, where Naira deposits for FX were not honored for extended periods. Bajomo explained that these funds have now been freed, allowing manufacturers to utilize their cash more effectively.
“Significantly, those trapped funds have now been freed. FX has been purchased, and people can now use the idle cash to their advantage,” she added.
Despite these positive developments, Bajomo pointed out that the main challenge in the FX regime is not availability but the price at which FX can be accessed. This raises questions about how many companies can afford the current rates and trade effectively. She also noted that there are still approximately 2 billion unreconciled FX positions, though the CBN is actively engaging with stakeholders to address these issues.
Bajomo suggested that the CBN should provide more forward guidance on FX policies to help stakeholders plan and comply with the current exchange rate regime, which, while free-flowing, requires clear directives for effective implementation.
