The Central Bank of Nigeria (CBN) has projected that diaspora remittances are expected to rise to ₦31.7871 trillion when fourth-quarter 2024 figures are released.
The substantial increase in diaspora remittances was attributed to the reforms carried out by the CBN especially the foreign exchange (FX) reforms designed to attract more FX into the country. This development will further strengthen FX supply and contribute to naira stability.
Recall that diaspora remittances rose from N12.478 trillion in 2023 to ₦22.734 trillion by the end of the third quarter of 2024.
CBN Governor, Olayemi Cardoso, who spoke at the 2025 Monetary Policy Forum, which brought together ministers, heads of government agencies involved in economic matters, and private sector stakeholders, disclosed that without its decisive policy interventions, the country’s inflation rate would have soared to 42.81 percent by December 2024.
“Counterfactual estimates suggest that without these decisive policy interventions, inflation could have reached 42.81 per cent by December 2024,” Cardoso stated. He also assured of the bank’s commitment to tackling inflation in 2025 using orthodox monetary policy measures.
According to him, throughout 2024, the CBN implemented bold policy measures across six Monetary Policy Committee (MPC) meetings. These included raising the Monetary Policy Rate (MPR) by a cumulative 875 basis points to 27.50 per cent; increasing the Cash Reserve Ratio (CRR) of Other Depository Corporations (ODCs) by 1750 basis points to 50.00 per cent and adjusting the asymmetric corridor around the MPR.
To strengthen the financial system and ensure macroeconomic stability, the CBN also undertook critical reforms, including unifying multiple exchange rate windows to enhance efficiency in the foreign exchange (FX) market. As a result, remittances through International Money Transfer Operators (IMTOs) increased by 79.4 per cent in the first three quarters of 2024, reaching $4.18 billion compared to $2.33 billion in the same period of 2023.
The apex bank, Cardoso said, has further restored market confidence by clearing a backlog of FX commitments amounting to $7.0 billion, improving FX liquidity. It also lifted restrictions on 41 items previously banned from accessing the official FX market since 2015. Additionally, the bank introduced new minimum capital requirements for banks, effective by March 2026, to strengthen Nigeria’s banking sector and position it to support the ambition of a $1 trillion economy.
Other initiatives included the launch of the Women’s Financial Inclusion Initiative (WIFI) under the National Financial Inclusion Strategy, aimed at bridging the gender gap in financial access. Cardoso also noted the introduction of the Nigeria Foreign Exchange Code, which promotes integrity, transparency, and efficiency in the FX market through six core principles designed to rebuild trust and inspire confidence.
“These reforms reflect our commitment to creating an enabling environment for inclusive economic development. However, achieving macroeconomic stability requires sustained vigilance and a proactive monetary policy stance,” he said.
Looking ahead to 2025, the CBN Governor stressed the need for strong coordination between fiscal and monetary authorities to anchor expectations and maintain investors’ confidence. “Managing disinflation amidst persistent shocks requires not only robust policies but also coordination between fiscal and monetary authorities to anchor expectations and maintain investor confidence. Our focus must remain on price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and ease economic hardship,” he stated.
Cardoso expressed optimism that Nigeria has “turned a corner” and that disinflation is now within reach. However, he warned that continued commitment to bold, coordinated policy measures is necessary to consolidate the progress made.
He further noted that cautious optimism is emerging globally regarding potential improvements in capital flows to emerging markets, particularly as advanced economies transition towards monetary easing. Nigeria’s ability to attract these inflows, he said, will depend on investor confidence in the country’s domestic reforms, particularly those that ensure macroeconomic stability and deliver positive real returns on investment.
“As we shift from unorthodox to orthodox monetary policy, the CBN remains committed to restoring confidence, strengthening policy credibility, and staying focused on its core mandate of price stability,” Cardoso added.
He pointed out that encouraging signs of policy success are already evident, as FX liquidity is improving, fostering greater stability in the market. The naira, he said, is gradually aligning with market fundamentals, creating a more predictable environment for domestic production, exports, and essential imports. “While challenges remain, we are confident that our policies are setting Nigeria on the path to sustainable economic stability,” he affirmed.
Earlier, the Deputy Governor for Economic Policy at the CBN, Mohammed Abdullahi, gave further insights into the country’s foreign exchange market reforms. He noted that liberalising the FX market was a pivotal step toward unifying a highly fragmented system and reducing substantial premiums driven by speculative activities and market inefficiencies.
“Prior to the adoption of a flexible exchange rate regime, the average exchange rate premium stood at an alarming 62.33 percent between January and May 2023. With the introduction of the flexible exchange rate regime, this premium was drastically reduced to an all-time low of 0.10 percent by June 2023, signaling significant progress towards market convergence,” Abdullahi stated.
Despite these positive trends, Abdullahi acknowledged that Nigeria’s disinflation efforts have been challenged by persistent demand and supply-side shocks, which have hindered the achievement of a single-digit inflation target. “These shocks, among other reasons, have necessitated decisive policy actions to prevent entrenched inflationary expectations,” he said, stressing the importance of maintaining robust communication and engagement with stakeholders.
Credit: thenationonlineng.net
