Nigeria’s Economic Turning Point? A Critical Look at CBN’s Claims of Stability

CBN Governor Olayemi Cardoso recently declared that Nigeria has reached a “decisive corner” in its economic journey, signaling a new era of stability. He pointed to falling inflation, a more stable FX market, and increased investor confidence as key indicators. But is this optimism fully justified? Are these improvements deep-rooted, or merely surface level shifts?

Cardoso painted a picture of a nation more resilient to external economic shocks. He discussed the flexible exchange rate, growing non-oil exports, and increased foreign reserves. It’s worth noting that the move to a flexible exchange rate, while intended to attract investment and reduce arbitrage, initially caused significant pain as the naira depreciated. How much of the current “stability” is simply the market finding a new equilibrium after that initial shock?

The Governor asserted that the CBN’s commitment to orthodox monetary policy is fixing long-standing economic distortions. He highlighted the drop in inflation from 34.6% to 16.05%. This is a substantial decrease. Yet, we must ask: is this decline sustainable? Have the underlying issues driving inflation truly been addressed, or is this a temporary reprieve influenced by factors outside of the CBN’s direct control? Food inflation has also reportedly eased. But this is something to watch because food security depends on resolving the clashes between herdsmen and farmers in the north of the country.

One of the most touted achievements is the clearing of the FX backlog. Cardoso stated that the CBN cleared billions in inherited FX debts, restoring market integrity and investor confidence. This move indeed removed a significant cloud of uncertainty hanging over the economy. Still, the real test lies in preventing such backlogs from accumulating again. Sustained discipline and transparency will be crucial.

The CBN credits the unification of exchange rates and new regulatory measures for the return of FX market stability. These steps likely played a role in reducing arbitrage and narrowing the gap between official and parallel market rates. Investor inflows also appear to have strengthened. Yet, the sustainability of these inflows hinges on maintaining a predictable and business-friendly environment. Capital is notoriously fickle, and any policy missteps could easily reverse these gains.

Cardoso further showcased the rise in foreign reserves to $46.7 billion, the highest in nearly seven years. He emphasized that this growth is organic, driven by improved FX liquidity and rising exports. This is certainly encouraging. However, the composition of these reserves matters. How much is truly liquid and readily available, and how much is tied up in less accessible assets?

The banking sector’s health is another area of focus. The recapitalization exercise seems to be progressing, with several banks meeting the new thresholds. This could strengthen the financial system’s ability to withstand shocks. Regardless, effective supervision and risk management will be vital to ensure that these banks remain stable and contribute to economic growth.

Nigeria’s removal from the FATF grey list is another positive development. This should reduce compliance burdens and boost international confidence. This said, maintaining a strong anti-money laundering framework is an ongoing process, and Nigeria must remain vigilant.

The growth in digital payments and fintech is also noteworthy. Innovation in this sector has the potential to drive financial inclusion and economic activity. But the CBN is right to emphasize the need for a robust regulatory framework to protect consumers and maintain financial stability. Striking the right balance between fostering innovation and managing risk will be key.

Ratings agencies have acknowledged Nigeria’s reform efforts, with Fitch, Moody’s, and S&P all revising their outlooks. While these upgrades are welcome, they should be viewed as a vote of confidence in the potential for improvement, rather than an endorsement of current conditions. A lot of work remains to be done to solidify these gains and achieve sustainable economic growth.

Looking ahead to 2026, the CBN plans to focus on reinforcing bank resilience, deepening price stability, and expanding digital payments infrastructure. These are all crucial priorities. But success will depend on effective implementation, strong coordination with other government agencies, and a willingness to adapt to changing circumstances. It also involves political will.

Nigeria may be turning a corner. Certain indicators suggest progress. However, to ensure long-term stability, the government will have to sustain the reform momentum, address structural challenges, and foster a more inclusive and diversified economy. Only then can we confidently say that Nigeria has truly entered a new era of prosperity.

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Keywords: Nigeria economy, CBN stability claims, Inflation Nigeria, FX market stability, Foreign reserves Nigeria, Nigeria banking sector, Digital payments Nigeria, Nigeria economic reform