Ayobami Oyalowo, Executive Director of Finance and Administration at the Ogun-Oshun River Basin Authority, has said reforms implemented under Central Bank of Nigeria (CBN) Governor Olayemi Cardoso have improved the foreign exchange market, strengthened external reserves and enhanced the resilience of the banking sector.
Assessing Cardoso’s three-year tenure, Oyalowo said the apex bank had shifted towards a more orthodox monetary policy framework, prioritising price stability, market discipline and stronger financial sector supervision.
Cardoso assumed office in September 2023 amid significant economic challenges, including foreign exchange market distortions, declining external buffers and rising inflation. Headline inflation stood at 25.80 per cent in August 2023, while multiple exchange rates, foreign currency shortages and accumulated foreign exchange obligations weakened business confidence.
According to Oyalowo, the reforms marked a departure from the CBN’s extensive involvement in intervention programmes across sectors such as agriculture, aviation and power.
He recalled that Cardoso disclosed at the November 2023 Annual Bankers’ Dinner that the CBN had injected more than ₦10 trillion into the economy through various intervention programmes.
Oyalowo said the scale of the interventions raised concerns about excess liquidity, policy effectiveness and the central bank’s involvement in activities that could be better handled by fiscal authorities and development finance institutions.
“The economic significance of this shift lies in restoring consistency between the CBN’s objectives and its policy instruments,” he said.
Forex Market Reforms and Reserve Growth
Oyalowo identified the foreign exchange market as one of the major areas affected by the reforms, following years of multiple exchange rates, restricted access to foreign currency and accumulated obligations.
He said the CBN’s measures were designed to improve price discovery, enhance liquidity and rebuild confidence in the official market.
Among the key initiatives, he highlighted the Electronic Foreign Exchange Matching System, introduced in December 2024, and the Nigerian Foreign Exchange Code, launched in January 2025. Both measures were aimed at improving transparency, accountability and market conduct.
He also pointed to the settlement of verified foreign exchange obligations from an inherited backlog estimated at $7 billion, noting that the move helped address concerns among international investors, airlines and multinational companies over capital repatriation and legitimate financial claims.
However, Oyalowo acknowledged that the adjustment came at a significant economic cost, including sharp naira depreciation, higher import costs, increased production expenses for manufacturers and mounting pressure on household purchasing power.
On external reserves, he said Nigeria’s gross foreign exchange reserves increased from approximately $33 billion when Cardoso assumed office to about $55 billion in October 2026.
He added that net external reserves had risen to approximately $46 billion, compared with $34.80 billion at the end of 2025 and $3.99 billion at the end of 2023, citing figures disclosed by the CBN.
Oyalowo also referenced the CBN’s 2025 Annual Report, which showed that aggregate foreign exchange inflows rose by 13.81 per cent to $109.86 billion in 2025, from $96.53 billion in 2024.
Net foreign exchange inflows stood at $60.81 billion, while autonomous sources accounted for approximately 64 per cent of total inflows.
He described the growing contribution of autonomous sources as significant, explaining that private-sector inflows, export earnings and remittances could provide a more sustainable supply of foreign exchange than administrative allocation.
Improved Credit Outlook and Investor Confidence
Oyalowo further cited improvements in Nigeria’s international credit assessments as evidence of renewed confidence in the country’s economic direction.
He noted that S&P Global upgraded Nigeria’s sovereign credit rating from ‘B−’ to ‘B’ with a Stable Outlook in May 2026. Fitch Ratings also affirmed Nigeria’s ‘B’ rating in October 2026 and revised its outlook from Stable to Positive.
He said Nigeria’s return to the FTSE Russell Frontier Market classification in September 2026 reflected improvements in foreign exchange market accessibility and capital repatriation.
Despite these developments, Oyalowo acknowledged that Nigeria’s sovereign credit ratings remained below investment grade.
He also cited National Bureau of Statistics data showing that capital importation increased to $23.22 billion in 2025, compared with $12.32 billion in 2024.
Portfolio investment accounted for approximately $19.74 billion, representing 85 per cent of total capital importation, while foreign direct investment stood at about $923 million.
According to him, the figures indicated renewed investor interest but underscored the need to attract more long-term capital into manufacturing, infrastructure, energy and technology.
Inflation, Interest Rates and Household Pressures
On inflation, Oyalowo said the CBN had maintained a restrictive monetary policy stance through higher interest rates and liquidity management measures.
He noted that headline inflation moderated to 15.39 per cent in August 2026, from 15.43 per cent in July and 25.80 per cent in August 2023.
However, he cautioned that the rebasing of the Consumer Price Index in 2025 meant historical inflation comparisons needed to be interpreted carefully.
“Moreover, lower inflation does not mean prices have returned to previous levels,” he said, stressing that households continued to bear the cumulative effects of earlier price increases.
He added that while tighter monetary policy could help contain inflationary pressures, high borrowing costs had made it more expensive for businesses to access credit, potentially constraining investment and economic expansion.
Bank Recapitalisation Strengthens Financial Sector
Oyalowo also highlighted the CBN’s banking sector recapitalisation programme, introduced in March 2024, as a major component of the reforms.
The programme raised minimum capital requirements to ₦500 billion for commercial banks with international authorisation, ₦200 billion for national banks and ₦50 billion for regional banks.
By March 2026, he said, 33 banks had met the revised requirements, collectively raising ₦4.65 trillion in fresh capital.
Domestic investors contributed 72.55 per cent of the capital raised, while international investors accounted for 27.45 per cent.
According to Oyalowo, the recapitalisation exercise had strengthened banks’ capacity to absorb financial shocks and finance larger transactions.
However, he emphasised that increased capital must be supported by sound governance, effective risk management and responsible lending practices.
“Stronger balance sheets must be accompanied by sound governance, effective risk management and responsible lending,” he said.
He noted that the challenge for policymakers was to balance financial sector resilience with affordable access to credit, particularly for businesses operating under restrictive monetary conditions.
CBN, Finance Ministry Deepen Policy Coordination
Oyalowo identified the September 18, 2026, Memorandum of Understanding between the CBN and the Federal Ministry of Finance as another important development.
He said the agreement established a framework for closer coordination between fiscal and monetary authorities, covering government cash management, debt issuance planning, liquidity forecasting and macroeconomic analysis.
According to him, the arrangement could reduce the risk of fiscal and monetary policies working at cross-purposes, particularly where government borrowing and spending influence inflation, liquidity conditions and access to credit.
He added that the framework recognised the structural factors driving inflation in Nigeria, including food supply constraints, energy costs, transportation and logistics expenses.
Consolidating the Gains of Reform
Three years into Cardoso’s tenure, Oyalowo said the CBN had recorded measurable changes in foreign exchange market accessibility, external reserves, banking sector capitalisation and investor participation.
He maintained that the governor’s emphasis on monetary orthodoxy had provided the apex bank with a clearer institutional direction, while acknowledging the economic costs associated with the adjustment process.
He stressed, however, that sustaining the gains would require consistent policies, stronger productive investment and measures to ease the pressure on households and businesses.
“The next responsibility is to consolidate these reforms, preserve the gains in macroeconomic stability and create conditions for stronger productive investment, more affordable credit and improved living standards,” Oyalowo said.
CBN Reforms Under Cardoso Boost External Reserves, Strengthen Banks – Oyalowo
