A year ago, when Olayemi Cardoso assumed office as the 12th Governor of the Central Bank of Nigeria (CBN) on October 5, 2023 precisely, the outlook was grim. Many pessimists forecasted that by now, the Nigerian naira would be helplessly dwarfed by the dollar, possibly trading at 1$/N5000, but because we have a man named Cardoso manning the affairs of the CBN, sharp opposite is the reality today.
This scenario of economic despair seemed inevitable given Nigeria’s deep-seated fiscal challenges, currency instability, and sky-high inflation. However, as Cardoso’s first year as CBN governor ticks, he has defied these grim predictions, setting a course for economic stabilization and restoration of market confidence amongst other things. We may now line up his flowers, it’s not too early.
From the outset, Cardoso was intentional in leading the CBN during a tumultuous time. His long and varied experience in commercial banking, government service, and economic advisory roles had prepared him for the complex tasks ahead. Before joining the CBN, he had spent over 29 years in commercial banking, including serving as Chairman of Citibank Nigeria Ltd., as well as a stint as Lagos State Commissioner for Economic Planning and Budget, where he oversaw transformative reforms that spurred Lagos’ economic development.
Having demonstrated remarkable capacity and unwavering dedication to reforming and strengthening Nigeria’s apex banking institution, it is only fitting that we pause now to reflect on the evolving story of Yemi Cardoso.
From the very moment he took office, some of us have closely followed his every move—watching, analyzing, and documenting his actions with a discerning eye.
The time has come to share this narrative, both with Nigerians and the global community, about how one man has risen to the occasion with exceptional resolve, even as Nigeria navigates a challenging chapter in its history.
When Cardoso assumed office, Nigeria’s foreign exchange market was in a dire state. The country was unable to meet dollar repatriation requests by foreign investors, leading to a backlog that bred apathy among international investors. Multiple exchange rates and arbitrage opportunities plagued the system, allowing a few to exploit forex obtained at government-controlled rates, only to resell it at the much higher black market rates.
In addressing this, Cardoso floated the naira against the dollar. This bold move, though painful, was necessary to curb currency speculation and restore investor confidence. By dismantling the artificial exchange rate controls and working transparently to clear a $7 billion backlog of forex demands, Cardoso’s leadership restored trust in the market.
Speaking to the Harvard Club of Nigeria, Cardoso explained, “The decision to float the naira was tough, but it was essential to send a message to the market that we were committed to transparency and sound monetary policy.”
He noted that trust is the currency of central banking and reiterated that without credibility, even the best policies would fail. His strategy has since reduced speculative trading and started to bring stability to currency markets.
One of Cardoso’s first actions as governor was to steer the CBN away from unorthodox activities that had blurred its core mandate. Under previous administrations, the CBN had ventured into various economic interventions, especially during the COVID-19 pandemic, that were outside its primary responsibilities of price stability and financial system oversight. Cardoso reversed these trends, reaffirming the bank’s focus on orthodox policies and monetary tools.
“We have refocused the central bank to its primary responsibilities,” Cardoso stated, stressing that the CBN would now concentrate on moderating inflation and ensuring price stability. One of his core objectives was reducing inflation, which had become a pressing issue for Nigerians.
Under Cardoso, the CBN adopted a consistent policy of tightening monetary policy to curb inflation. While inflation remains a challenge, there have been signs of progress. In August 2024, inflation eased to 32.15%, down from the July rate of 33.40%. The CBN raised its lending rate by 50 basis points to 27.25%, a clear indication of its commitment to controlling price growth.
Cardoso acknowledged the challenges, citing rising insecurity in food-producing areas as a significant driver of food inflation. Nonetheless, he remains focused on bringing inflation under control, emphasizing the need for coordinated efforts with other stakeholders to address food price volatility.
The current administration’s ambitious target of achieving a $1 trillion economy by 2030 places significant demands on the financial sector. Cardoso’s CBN has taken steps to bolster this goal by announcing a new recapitalization threshold for banks, ensuring they are robust enough to support sustained growth. By raising the capital base, the CBN aims to build a stronger banking sector capable of driving the nation’s economic expansion.
This policy move is one of many efforts aimed at reinforcing the banking sector’s critical role in achieving sustainable economic development.
In just one year, Cardoso has taken bold steps to steer Nigeria’s economy away from the precipice of disaster predicted by many skeptics. By reforming the foreign exchange market, refocusing the CBN on its core mandate, and committing to policies that enhance investor confidence and curb inflation, Cardoso has made significant strides in stabilizing the economy.
Although challenges remain, including inflation and exchange rate volatility, Cardoso’s leadership has shown that with the right approach, Nigeria’s economic woes can be mitigated. His first year in office has been a testament to the power of sound, transparent, and consistent policy in restoring faith in the financial system.
The naira may not yet be soaring, but it is far from the catastrophic levels predicted by pessimists, thanks to the steady hand of Olayemi Cardoso. Here I drop my pen for now.
Anastasia John E
Editorial Team , OBSERVERSTIMES