Nigeria’s Economic Turnaround: Fact or Fiction? CBN Governor Weighs In

CBN Governor Olayemi Cardoso’s recent address at the Chartered Institute of Bankers of Nigeria (CIBN) painted a stark picture: the current administration inherited not just a struggling economy, but one already “over the cliff.” It’s a strong statement, implying the challenges were beyond the usual macroeconomic headwinds. We need to unpack this.

Cardoso highlights progress, pointing to inflation dropping from a peak of 34.6% to 16.05%. Food inflation, too, seems to be easing. He credits the turnaround to a return to “orthodox monetary policy,” improved data usage, better communication, and an end to financing government deficits. These are textbook moves, designed to stabilize a wobbly ship. Whether they are the sole drivers of this apparent improvement is something else entirely.

It’s worth noting that the CBN is aiming for a full inflation-targeting framework, projecting continued disinflation into 2026. The plan involves boosting domestic production, enhancing foreign exchange liquidity, and maintaining disciplined liquidity management. Sounds good on paper. My experience, though, tells me that execution is everything, and these are complex goals with numerous potential pitfalls.

The CBN Governor describes the pre-existing situation in harsh terms: surging inflation, depleted reserves, a paralyzed FX market, and a massive backlog of foreign exchange obligations. He notes that businesses couldn’t plan, investors were hesitant, and the parallel market spread was dangerously wide. He’s not wrong. I remember the palpable anxiety in the business community during that period. He argues that despite a fundamentally strong banking sector, it was at risk due to the macro climate. This is a crucial point. The health of the banks is inextricably linked to the overall economy.

GDP growth of 4.23% in the second quarter of 2025, the strongest in four years, is definitely a positive sign. Yet, such figures should always be viewed in context. What were the growth rates like before? What sectors are driving this growth? Is it sustainable?

Looking to the future, Cardoso lays out key priorities: strengthening the banking system, ensuring durable price stability via inflation targeting, modernizing payments, and boosting financial inclusion. These are all vital for long-term economic health in Nigeria. But these are not easy wins, and require sustained commitment.

Chairman of the Body of Bank CEOs, Oliver Alawuba, echoes the optimism, suggesting the economy is entering a period of stability. He believes recent reforms are bearing fruit, citing a stronger exchange rate, improved credit ratings, and expanding access to credit.

Alawuba acknowledges the naira’s previous struggles, highlighting its recovery from roughly N1,700 to N1,400 against the dollar. Credit rating improvements are definitely something to cheer. But we need to drill down: Which agencies are upgrading Nigeria’s rating, and what are their specific reasons?

The bankers emphasize the need for continued synergy between monetary and fiscal authorities. They are right. Alignment between the CBN and the government’s economic policies is crucial for effective implementation. Alawuba is correct when he states, “The journey is still ahead.” Stability is just the first step.

He reveals that private sector lending stands at N74 trillion but believes the banking industry can do more to stimulate economic activity. He calls for responsible borrowing, prompt repayment, and stronger risk-management practices. The balance between encouraging lending and managing risk is always a tightrope walk for banks. The banking body also restates their commitment to working with the FG towards the national ambition of achieving a $1 trillion GDP in the coming years.

Still, questions linger. Can the CBN truly maintain its independence in the face of political pressures? Can the government effectively tackle corruption, improve infrastructure, and create a more business-friendly environment? The answers to these questions will ultimately determine whether Nigeria’s economic “recovery” is real and sustainable. The $1 trillion GDP goal is ambitious, especially when external factors such as oil price fluctuations and global economic uncertainty remain significant.

We need to see consistent progress, not just isolated data points, to truly believe a sustainable recovery is underway. The progress made should be measured against the severity of the challenges that preceded it. The road to a truly prosperous Nigeria is long, and it requires more than just good intentions. It needs concrete actions, accountability, and a relentless focus on creating a level playing field for all.

Given these facts, Nigeria’s current economic situation is complex. There are definitely signs of improvement, but significant challenges persist. The coming year will be crucial in determining whether these positive trends are sustainable or merely a temporary respite. A dose of healthy skepticism is definitely warranted.

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Keywords: Nigeria economy, CBN governor, inflation targeting, GDP growth, foreign exchange, banking sector, economic recovery, private sector lending