By Ezekiel David
Despite a significant increase in Nigeria’s foreign exchange reserves, the Naira has depreciated by over 50% against the US dollar since Yemi Cardoso assumed the governorship of the Central Bank of Nigeria (CBN) a year ago.
Data from the FMDQ reveals a stark decline from N747.76/$1 on September 22, 2023, to N1,541.52/$1 on September 20, 2024.
Nigeria’s foreign exchange reserves reached their highest level under President Bola Tinubu’s government during this period, growing by 12% to $37.39 billion; nonetheless, the Naira’s depreciation has continued despite this rise.
Persistent external pressures and internal fiscal imbalances have overshadowed the CBN’s efforts to bolster liquidity and manage external shocks.
After coming into office on September 22, 2023, Cardoso pursued a number of reforms that were intended to reduce inflation, fortify the Naira, and improve market transparency. Nevertheless, the intended stabilisation has not yet been attained with these methods.
Experts offer differing perspectives on Cardoso’s performance. Development economist Dr. Aliyu Ilias describes Cardoso’s approach as “topsy-turvy,” noting that the recent marginal reduction in inflation is primarily attributed to the harvest season.
“He is sacrificing growth because he wants to reduce inflation. I will score him below average. He needs to do more and be more strategic with his approach,” Ilias stated.
Conversely, Brain Essien, a financial analyst and founding partner at McBrain & Company, believes Cardoso “hasn’t done too bad,” considering the challenging economic climate he inherited. “His objective was inflation-targeting, and so far so good, we have had two consecutive decelerated inflation, which is good,” Essien commented.
Essien advocates for halting dollarisation and prioritising the Naira’s value within the economy. “The CBN should look for more creative ways to strengthen the naira itself. Or else, it will keep sinking against the dollar, and there is very little we can do about it,” he warned. He also recommends maintaining the current Monetary Policy Rate (MPR) of 26.75%, cautioning against adjustments exceeding +/- 25 basis points.
