A stronger economic ties between Saudi Arabia and others in the Middle East with the Nigerian diaspora community would boost Nigeria’s infrastructural development and tourism potential, the Governor of the Central Bank of Nigeria, Olayemi Cardoso, has said.
Cardoso was speaking during a meeting with Talal Al-Humond, the Assistant Governor for Monetary Affairs, Saudi Arabia Central Bank (SAMA) on the sidelines of the just-concluded inaugural Conference on Emerging Markets Economies organised by the Ministry of Finance, Saudi Arabia, and the International Monetary Fund (IMF) Regional Office at Al Ula, Riyadh, Saudi Arabia.
The CBN governor said Saudi Arabia’s dedication to diversifying its economy through innovative environmental projects, large-scale transformation, and tourism investment was essential for development and worthy of emulation.
He reaffirmed the commitment of the CBN to collaborate with the Nigerian Diaspora community in the Middle East to improve remittance flows and strengthen Nigeria’s financial sector.
The CBN, he said, would continue to enhance macroeconomic fundamentals to establish an enabling environment to facilitate the growth of the private sector and the generation of high-quality jobs for Nigerians.
In his response, Mr. Talal Al-Humond assured Mr. Cardoso that the Saudi Central Bank would work with the CBN to ensure the attainment of mutually beneficial national objectives.
Meanwhile, during a panel discussion moderated by the Director, Middle East and Central Asia Department, IMF, Jihad Azour, at the conference, Mr. Cardoso cited reforms in the financial markets that addressed distortions in the Nigerian foreign exchange market that previously experienced a gap of up to 60 percent between the official and parallel market exchange rates.
Due to consistent policy direction by the apex bank, he said market confidence has improved, while transparency in foreign exchange trading has been enhanced, with the gap significantly narrowed to approximately 4-5 percent.
Also, Cardoso highlighted the adoption of an electronic matching system to improve transparency in the FOREX market and the introduction of a foreign exchange code of ethics, which all Nigerian banks subscribed to ensure adherence to market rules.
“As a result of these measures Nigeria’s foreign reserves exceeded $40 billion, marking the highest level in nearly three years,” Cardoso noted.
He acknowledged that Nigeria faced significant economic challenges, including capital flow exits, multiple exchange rate regimes, currency depreciation, high inflation, and a backlog of foreign exchange transactions, which led to a loss of confidence in the country’s currency.
On his assumption of office, the CBN Governor said his team prioritised restoring confidence in the market, by addressing the backlog of foreign exchange transactions and demonstrating a commitment to economic stability.
Cardoso emphasised that Nigeria implemented a tight monetary policy stance to tackle inflation and restore macroeconomic discipline.
Over the past year, he explained that the CBN raised interest rates by 850 basis points and shifted away from quasi-fiscal interventions that distorted the economy, adding that Nigeria’s approach, remained firmly rooted in orthodox monetary policies, a stance that was consistently communicated to market participants.
Another significant reform, he noted, was the removal of the fuel subsidy, which, along with multiple exchange rate inefficiencies, had cost the country approximately six percent of its Gross Domestic Product (GDP) annually.
Noting that previous administrations lacked the political will to remove the subsidy on petroleum products, Cardoso said the decision to remove subsidy from the pricing template of petroleum products brought profound positive impact on Nigeria’s overall fiscal outlook.
On financial sector reforms, he explained that the decision of the CBN to mandate banks to recapitalise was to strengthen the financial system and build buffers to withstand future economic shocks.
He noted that these measures have so far proven successful in bolstering the sector, adding that the government was determined to continue with the reforms to bring a total turnaround.
Addressing the broader global economic climate, he emphasised the importance of tailoring policy decisions to suit each country’s unique needs for the economy.
He recounted how Nigeria continued to tighten monetary policy even when global trends suggested otherwise, pointing out despite the initial skepticism, a year later, many financial practitioners and international colleagues recognised that Nigeria made the right decisions based on its specific peculiar economic conditions.
On actions required to enhance financial inclusion and the role of digitalisation and financial technology in mitigating potential risks, the CBN governor referenced Nigeria’s experience, where the financial inclusion rate currently stands at 74 percent.
He underscored the critical need to expand this policy aggressively to ensure that economic growth benefits all segments of society.
As the economy rebounds, he emphasised the need to reduce disparities and ensure broad-based financial access.
Highlighting digitalisation as a key driver in advancing financial inclusion, Cardoso said expanding mobile money services, leveraging technology and prioritising gender-focused initiatives due to the positive economic impact of empowering women across the African continent would significantly close the financial access gap, particularly for underserved populations.
He reaffirmed the CBN’s commitment to maintaining macroeconomic stability, sustaining policy consistency, and ensuring long-term resilience for the Nigerian economy.
The two-day event held from February 16 to 17, 2025 was attended by policymakers and economic experts from across emerging markets served as a key platform for addressing structural changes in the global economy and their impact on emerging markets.
