Onome Amuge
Nigeria is emerging from a prolonged period of economic uncertainty with renewed investor confidence, record foreign capital inflows, and a financial system reshaped by ambitious reforms, according to the Central Bank of Nigeria (CBN).
In the first 10 months of 2025, the country recorded $20.98 billion in foreign capital inflows, a 70 per cent increase over the total for 2024 and a 428 per cent increase compared with the $3.9 billion recorded in 2023. CBN Governor Olayemi Cardoso attributed the inflows to disciplined monetary policy, strengthened regulatory frameworks, and the restoration of credibility in Nigeria’s financial system.
Speaking at the 60th Annual Bankers’ Dinner recently, Cardoso described the inflows as evidence that Nigeria’s macroeconomic reforms were paying off, noting that approximately $30 billion in potential investments was being reclaimed following the country’s exit from the Financial Action Task Force (FATF) grey list. “Exiting the list signals a major restoration of confidence and eases compliance frictions for correspondent banks,” Cardoso said, highlighting a coordinated national effort that involved the CBN, the Ministry of Justice, the NFIU, and the EFCC.
Cardoso dwelled on the state of the Nigerian economy just a year ago, emphasising the scale of the challenges the reforms were designed to address. He noted that inflation had risen to 34.6 per cent in November 2024, external reserves were depleted, and the foreign exchange market was paralysed by multiple exchange rates, with the gap between official and parallel rates exceeding 60 per cent. Businesses struggled to plan, investors hesitated to commit, and FX obligations worth more than $7 billion went unmet.
“High inflation had become normalized, stuck in double digits for most of the last 35 years. Food prices were crippling households, liquidity conditions were unstable, and many businesses faced existential threats. The banking sector, though fundamentally sound, was at risk of being dragged into distress by a deteriorating macro environment and inconsistent policy signals,” Cardoso said.
Cardoso noted that over the past year, Nigeria has transitioned from crisis management to laying the foundation for sustainable growth. GDP expanded 4.23 per cent in the second quarter of 2025, the strongest quarterly performance in four years, driven by telecommunications, financial services, and improved oil output. Inflation has been brought down steadily, with the headline rate falling to 16.05 per cent in October and food inflation easing to 13.12 per cent, marking seven consecutive months of disinflation.
The CBN governor emphasised that this progress was rooted in a return to orthodox monetary policy. Measures included ending monetary financing of fiscal deficits, implementing disciplined liquidity management, strengthening data analytics, and improving communication with markets to anchor expectations. “Price stability is the foundation of sustainable growth,” he said, noting that Nigeria would continue its transition toward an inflation-targeting framework.
According to Cardoso, the transformation of the foreign exchange market has been particularly striking. He noted that the multi-window FX system has been unified, a backlog of unmet FX obligations has been cleared, and the CBN’s Electronic Foreign Exchange Management System (EFEMS) now provides real-time regulatory oversight. He added that the Nigerian Foreign Exchange Code has established governance, transparency, and fair dealing among authorised dealers, reducing opacity and manipulation. As a result, the naira now trades within a narrow and stable range, with the gap between official and parallel rates under 2 per cent.
Capital inflows and external resilience
Foreign investor confidence is being reinforced by the CBN’s broader macroeconomic strategy. Diaspora remittances increased by 12 per cent in 2025, aided by the introduction of the Non-Resident BVN. Meanwhile, non-oil exports grew by more than 18 per cent year-on-year, reflecting rising competitiveness and the benefits of a flexible FX regime. Nigeria’s external buffers have strengthened, with foreign reserves reaching $46.7 billion in mid-November, providing more than ten months of forward import cover.
Cardoso underscored that these improvements were not reliant on external borrowing but on structural reforms, better market functioning, and robust capital inflows. He also noted that the current account balance rose 85 per cent in Q2 2025 to $5.28 billion, up from $2.85 billion in Q1, showcasing the external sector’s recovery.
Banking sector recapitalisation and resilience
Nigeria’s banking sector has been a cornerstone of this turnaround. A nationwide recapitalisation exercise is on track, with 27 banks having raised capital and 16 already meeting or exceeding new thresholds ahead of the March 31, 2026 deadline. Stress tests indicate that the sector remains fundamentally sound, with regulators enhancing oversight of cyber risks, credit governance, and operational discipline.
The CBN has also focused on strengthening MSME access to credit. Microfinance lending expanded by over 14 per cent in 2025, and new digital-credit products reached more than 1.2 million small enterprises. These efforts, combined with improved digital payments infrastructure, have expanded financial inclusion, with 74 per cent of adults now having access to formal financial services.
Digital finance and fintech leadership
Nigeria continues to lead Africa in fintech innovation. More than 12 million contactless payment cards are in circulation, and over 40 fintech innovators are operating within the CBN sandbox. The country is home to eight of Africa’s nine unicorns, and leading apps have surpassed 10 million downloads each. Strategic engagement with the global fintech community, including at the IMF’s Fall Meetings,has helped shape responsible innovation and regulation in emerging digital assets, tokenisation, and stablecoins.
FATF grey-list exit: Restoring confidence
One of the year’s most notable milestones was Nigeria’s exit from the FATF grey list, a development that has unlocked approximately $30 billion in potential investment. Cardoso described it as a coordinated national effort, noting improvements in supervision, reporting standards, intelligence-sharing, and governance tools such as EFEMS and the FX Code. The removal from the grey list has improved cross-border finance and reduced compliance frictions for correspondent banks.
Fiscal-monetary coordination and institutional reforms
Cardoso stressed that monetary policy is most effective when aligned with fiscal discipline. Recent reforms, including the discontinuation of direct deficit financing, the Revenue Optimisation framework, and upgrades to the Treasury Single Account, have strengthened Nigeria’s fiscal capacity. The CBN continues to deploy technology and analytics to maintain policy credibility and prevent reversals.
International recognition and investor sentiment
Nigeria’s reform trajectory has been validated by rating agencies, with Fitch upgrading the country from B- to B (stable), Moody’s raising its rating from Caa1 to B3, and S&P affirming B-/B with a positive outlook. These endorsements have translated into improved borrowing terms, increased investment inflows, and enhanced credibility. In November, Nigeria raised $2.35 billion through a Eurobond, attracting $13 billion in orders—the largest in its history.
Looking Ahead: Priorities for 2026
Cardoso outlined six strategic priorities for 2026:
-Strengthening the banking system and protecting depositors.
-Delivering durable price stability via enhanced inflation-targeting.
-Expanding digital payments and financial inclusion.
-Promoting responsible fintech innovation with clear regulatory guardrails.
-Building institutional capacity and operational efficiency at the CBN.
-Deepening partnerships with regulators, industry stakeholders, and international partners.
“These priorities are not abstract aspirations. They are practical, measurable, and fully aligned with our mandate to safeguard monetary and financial stability,” Cardoso said.
The CBN governor concluded by describing the year’s achievements as the foundation for a more resilient Nigeria. He noted that structural reforms in the FX market, banking recapitalisation, inflation moderation, digital finance expansion, and FATF compliance have collectively enhanced the economy’s resilience to external shocks, from volatile oil prices to shifts in credit rating sentiment.
“Stability remains the bedrock upon which investment flourishes, resources are allocated efficiently, and purchasing power is protected. In 2026, we will deepen engagement with stakeholders, strengthen collaboration with other regulators, and foster responsible innovation across the financial system. By remaining disciplined, forward-looking, and true to our mandate, we will ensure that Nigeria’s economy remains stable, inclusive, and primed for sustainable growth,” Cardoso said.
He noted that with these reforms, Nigeria is positioning itself not merely to recover but to emerge as a resilient, investor-friendly economy with a strengthened financial system and a credible policy framework, offering a blueprint for macroeconomic management across Africa.
