By Peter Egwuatu, Assistant Business Editor

The reforms instituted by the Olayemi Cardoso-led Central Bank of Nigeria (CBN) has prepared for the economy to withstand shocks, by creating buffers that safeguard its resilience.

Global and domestic business leaders recognized that Nigeria is now well positioned to withstand external shocks and sustain confidence of investors. The stability of the exchange rate and continued inflows into external reserves present a great opportunity for economic resilience and sustained growth.

The Nigerian economy has experienced major transformation in recent years, following reforms in the sector.
From exchange rate unification, increasing regulatory guidance, improved transparency in the forex market operations, enhanced surveillance in financial flows to the economy have all led to sustained growth.

A large part of these reforms and policy implementations have brought significant benefits to the economy including providing buffers for stability and growth.

Middle East crisis.

A major milestone is that despite headwinds necessitated by the ongoing Middle East crisis, the Nigeria economy remains sound and able to attract global investors.
The investors have continued to scramble for Nigerian assets as the impact of the CBN’s reforms in the financial sector spreads to key segments of the economy.
How the reform started.
The CBN had embarked on a series of bold reforms to attract more foreign capital to the economy, achieve price and exchange rate stability.

Over two years ago, the new administration and the CBN-led by its Governor, Olayemi Cardoso liberalised the foreign exchange market, stopped central bank financing of the fiscal deficit, and reformed fuel subsidies. The government also strengthened revenue collection and took strategic steps to reduce surging inflation rate.

Since these reforms were implemented, international reserves have increased, and people can now access foreign exchange in the official market.

Besides, Nigeria successfully returned to international capital markets last December and was recently upgraded by rating agencies. A new domestic, private refinery is positioning Nigeria up the value chain in a fully deregulated market.
CBN’s policies, including the currency reforms, led to investment inflows from abroad, and reduced interventions in the domestic forex market.

The unification of exchange rates and the clearing of over $7 billion FX backlog raised the country’s investment outlook, with multilateral organizations, like the World Bank describing it as bold intervention to improve the economy’s sustainability in the long run.
Sovereign Risk
Also, Nigeria’s sovereign risk spread has fallen to the lowest level since January 2020, erasing the premium accumulated during the pandemic and subsequent strain on its economy. All these are deliberate efforts to woo investors and sustain capital inflows to the economy.

Economy shocks

CBN Governor, Olayemi Cardodo explained that in addressing Nigeria’s economic challenges, collaboration is key: “Managing disinflation amidst persistent shocks requires not only robust policies but also coordination between fiscal and monetary authorities to anchor expectations and maintain investor confidence. Our focus must remain on price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and ease economic hardship,” Cardoso said.
The CBN also focused on strengthening the banking sector, introducing new minimum capital requirements for banks (effective March 2026) to ensure resilience and position Nigeria’s banking industry for a $1 trillion economy. These reforms and developments reflect the Bank’s commitment to creating an enabling environment for inclusive economic development.

However, achieving macroeconomic stability requires sustained vigilance and a proactive monetary policy stance. “As we shift from unorthodox to orthodox monetary policy, the CBN remains committed to restoring confidence, strengthening policy credibility, and staying focused on its core mandate of price stability,” Cardoso stated.
Continuing, he said monetary policy easing became necessary following a review of macroeconomic developments.

According to him, the decision by the Monetary Policy Committee, MPC to ease the policy stance was made in the light of improving inflation trends. “The committee’s decision to lower the monetary policy rate was predicated on the sustained disinflation recorded in the past five months, projections of declining inflation for the rest of 2025 and the need to support economic recovery efforts,” Cardoso said.

Rising foreign capital inflows

Cardoso recently announced that Nigeria makes roughly $600 million monthly from diaspora remittances inflows to the economy.

He said Nigeria’s experience indicates that spillover effects have been relatively contained reflecting positive reform outcomes, including exchange rate stability, stronger reserve offers and an enhanced monetary policy framework.
He said recent gains, including lower inflation, FX market stability and stronger reserves, have boosted investor confidence and capital flows.

Cardoso earlier explained that within the banking sector, the sector remains robust with key indicators reflecting a resilient system.

“The non-performing loan ratio remains within the prudential benchmark of five per cent, showcasing strong credit risk management. The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 per cent, a level which ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test conducted also reaffirmed the continued strength of our banking system,” he said.

To ensure that our banking system can effectively support the growth of our economy, efforts to strengthen banks’ capital buffers were announced in 2023 with a two-year implementation window.

“I am pleased to note that a significant number of banks have raised the required capital through right issues and public offerings well ahead of the 2026 deadline! I believe that the banking sector is in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMEs and supporting investment in critical sectors of our economy,” he said.

Cardoso explained that the banking sector remains robust, with key indicators reflecting a resilient system.

“The non-performing loan ratio remains within the prudential benchmark of five per cent, showcasing strong credit risk management. The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 per cent, a level which ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test conducted also reaffirmed the continued strength of our banking system,” he said.

“I am pleased to note that a significant number of banks have raised the required capital through rights issues and public offerings well ahead of the 2026 deadline. I believe that the banking sector is in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMES and supporting investment in critical sectors of our economy,” he said.

X-ray on economy

The Global Economic Prospects report, the World Bank upgraded Nigeria’s economic growth forecast for 2026 to 4.4 per cent, from the 3.7 per cent projection it had announced for the country in June 2025.

The report said: “Growth in Nigeria is forecast to strengthen to 4.4 percent in both 2026 and 2027, the fastest pace in over a decade. This further firming of growth is anticipated to be underpinned by a continued expansion in services and a rebound in agricultural output, with a modest acceleration in non-oil industry.
“Economic reforms, including in the tax system, along with continued prudent monetary policy, are expected to continue supporting activity. They are also expected to improve investor sentiment and reduce inflation further.

Higher oil output is expected to offset lower international oil prices this year, helping to boost fiscal revenues and strengthen the external balance.”

The apex bank appeared to have set the ball rolling in terms of forecasting positive economic outlooks for the country, when in its macroeconomic outlook for 2026, released last month, it made optimistic projections for the nation’s economy.
The apex bank stated: “The year 2026 presents a realistic window of opportunity for macroeconomic stabilisation. The Nigerian economy is expected to continue expanding, with growth projected at 4.49 per cent in 2026. The projection is hinged on continued gains from broad-based structural reforms and a gradually easing monetary policy stance.