When the President Bola Ahmed Tinubu’s administration speaks with enthusiasm about its aspiration to build a $1 trillion economy by 2030, the kick for such confidence is its good fortune to have emplaced a leadership at the Central Bank that is not only imbued with the right vision to drive the process, but also the mission to build a lasting economic legacy for posterity.
Since the Olayemi Cardoso-led management at the CBN came to office with radical reforms of the financial system barely a year ago, there are clear indications about its commitment to help build a strong, virile and resilient Nigerian economy.
On assumption of office, Mr. Cardoso resolved from the first day to lead the CBN to initiate and execute a number of impactful monetary policy measures aimed at enhancing market transparency and accountability, ensuring financial stability, and guaranteeing a sound atmosphere for prospective investors to thrive in the Nigerian economy.
The evidences of his management’s efforts are reflected in the positive highlights of the improved financial performance contained in apex bank’s 2024 financial statements and results published recently in its website.
The results gave an unassailable attestation to the CBN’s commitment to economic stability, sound policy implementation, and strategic financial management to building a strong and virile economy for Nigeria.
On all indicators, the financial results reflected significant improvements in the country’s performance in terms external reserves, asset quality, cost efficiency and enhanced aggregate bottom-line numbers.
Details of the results showed that accretion to the country’s external reserves grew to $38.8bn in 2024, from $36.6bn in the previous year, majorly as a result of enhanced portfolio investments, growth in diaspora remittances and rising Federal Government receipts attributable to improved trust and confidence in the country’s economy as a direct consequence from superlative coordination between fiscal and monetary authorities, led by the CBN, of core revenue generating entities like the Nigerian National Petroleum Company (NNPC) Limited and others in the diaspora.
The leadership disposition of the CBN through its uncompromising commitment to external sector stability, by ensuring Nigeria was better positioned to discharge its international obligations to partners, stabilize the Naira, and boost macroeconomic confidence, played a key role in achieving the positive outcome.
Also, raising the country’s bottom-line from a deficit position of ₦1.3trn in 2023 to a surplus of ₦165bn in 2024, was fundamentally as a result of a pragmatic strategies pursued by the CBN to encourage the government to cut down expenditure, promote investments, to boost income from foreign exchange transactions.
The outcome of these positive interventions have manifested in noticeable decline in loans and receivables reported in the Bank’s financial statements, from ₦16.1trn in 2023 to ₦11.9trn in 2024, primarily as a result of significant recoveries from several intervention lending to revive key sectors of the economy and a deliberate policy shift from monetary financing through ways and means pursuant to the new stance to allow market fundamentals dictate the pace for credit allocation and financial sector development.
Besides, during the year under review, the CBN also demonstrated its capacity to drive down the country’s operating expenses through its well-articulated and optimized policies, reflecting a cost-conscious culture.
The Bank said it was able to achieve this objective through strategic cost rationalization strategies, including deliberate efforts to eliminate non-essential expenses, and accommodate only functional operational processes across its regional branches and departments.
As a regulatory authority committed to encouraging timely financial reporting and internal controls in line with the Financial Reporting Council (FRC) requirements, the CBN, during the year, completed an assessment of its internal controls systems.
During the year, the CBN’s framework for the 2024 reporting year duly certified by the joint external auditors as largely effective, in terms of transparency and accountability; strong institutional governance and internal risk controls, and in alignment with international best practices in central bank operations.
Despite its superlative performance, concerns have continued to mount over challenges to its mandate relating to increased liquidity management expenses, and how policies could be fashioned to eliminate factors capable of frustrating the realisation of its mandate in the years ahead.
Again, in 2024, the Bank’s costs climbed to ₦4.5trn, from ₦1.5trn recorded in 2023. The increase was linked with the Bank’s tightening monetary policy stance calculated to rein in the spiralling inflationary pressures during the year.
Part of the counter-inflationary initiatives by the CBN was its decision to allow more frequent and higher-value Open Market Operations (OMO) to curb high costs associated with excess liquidity from fiscal injections to the economy on behalf of the Federation.
Besides, the CBN has initiated policies to curb foreign exchange liabilities reported in the financial statements, which showed that losses increased during the year from ₦6.3trn in 2023 to ₦13.9trn due to the high volume of derivative contracts settled by the apex Bank in 2024.
The proactive settlement of the cost of legacy transactions inherited by the Cardoso-led management from previous administrations was part of CBN’s broader strategy to bring down outstanding foreign exchange liabilities, to shield it from further FX exposure, boost net foreign reserves, improve Nigeria’s external reserve, restore credibility in the country’s forwards markets and ensure transparency in discharging legacy obligations.
The improved financial performance of the CBN in 2024 underlines the quest to sustain the reform initiatives by the Cardoso-led management to reposition the apex bank as a credible regulatory monetary policy authority.
In all, with reinforced governance and accountability practices to instil operational discipline, the CBN’s pursuit of reforms and a balanced monetary policy stance to ensure price and financial system stability will bolster public trust and support the country’s economic recovery.
