Cardoso has asked for Stronger Economic bond with Middle East, Diaspora while in Riyadh
Governor of Central Bank of Nigeria, Mr. Olayemi Cardoso
Cardoso has asked for Stronger Economic bond with Middle East, Diaspora while in Riyadh
• Improving remittance flows and strengthen the country’s financial sector.
• Just 15.4% of FX demand accessed at official window.
Governor of Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has canvassed stronger economic ties with the Middle East and the Nigerian diaspora community in the region.
Cardoso made the call during a meeting with Assistant Governor for Monetary Affairs, Saudi Arabia Central Bank – SAMA, Talal Al-Humond, on the sidelines of the just-concluded inaugural Conference on Emerging Markets Economies, organised by the Ministry of Finance, Saudi Arabia, and International Monetary Fund (IMF) Regional Office in Riyadh.
That was as the Nigerian Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, expressed the government’s commitment to removing barriers to youth participation in key sectors of the economy, including agriculture, manufacturing, and exports.
Edun gave the assurance in his office in Abuja, when the Arewa Youth Forum (AYF) paid him a courtesy visit.
Meanwhile, Manufacturers Association of Nigeria (MAN) said most commercial banks in the country charged manufacturers between 35 per cent and 48 per cent lending rates in fourth quarter of 2024.
The revelation was contained in the Q4, 2024 publication of the Manufacturers CEO Confidence Index (MCCI), which measures changes in quarterly pulse of manufacturing activities in relation to movement in the macro-economy and government policies.
The two-day conference, held in Al Ula, Saudi Arabia, from February 16 to 17, brought together policymakers and economic experts from across emerging markets.
Cardoso said there were lessons to be learnt from Saudi Arabia in terms of infrastructural development and tourism.
According to him, Saudi Arabia’s dedication to diversifying its economy through innovative environmental projects, large-scale transformation, and tourism investment is essential for development
In a statement yesterday, Cardoso also reaffirmed his dedication to collaborating with the Nigerian Diaspora community in the Middle East to improve remittance flows and strengthen the country’s financial sector.
He stated that CBN would continue to enhance macroeconomic fundamentals to establish an environment that will facilitate the growth of the private sector and the generation of high-quality jobs for Nigerians.
Responding, Talal Al-Humond assured Cardoso that the Saudi central bank would work with CBN to ensure the attainment of mutually beneficial objectives.
During a panel discussion moderated by Director, Middle East and Central Asia Department, IMF, Jihad Azour, at the conference, Cardoso cited reforms in the financial markets that addressed distortions in the Nigerian foreign exchange market, which had previously experienced a gap of up to 60 per cent between the official and parallel market exchange rates.
Cardoso has asked for Stronger Economic bond with Middle East, Diaspora while in Riyadh.
He stated that due to consistent policy direction, improved market confidence, and enhanced transparency in forex trading, the gap had significantly narrowed to approximately four to five per cent.
Cardoso also highlighted the adoption of an electronic matching system to improve transparency in the market and the introduction of a foreign exchange code of ethics, which all Nigerian banks signed, to ensure adherence to market rules.
He said due to those measures, the country’s foreign reserves exceeded $40 billion, marking its highest level in nearly three years.
Cardoso acknowledged that Nigeria had faced significant economic challenges, including capital flow exits, multiple exchange rate regimes, currency depreciation, high inflation, and a backlog of foreign exchange transactions, which led to a loss of confidence in the country’s currency.
He said upon assumption of office, his team prioritised restoring confidence in the market by addressing the backlog of foreign exchange transactions and demonstrating a commitment to economic stability.
Cardoso emphasised that Nigeria implemented a tight monetary policy stance to tackle inflation and restore macroeconomic discipline.
Over the past year, he explained that the central bank raised interest rates by 850 basis points and shifted away from quasi-fiscal interventions that had distorted the economy.
He stressed that Nigeria’s approach had remained firmly rooted in orthodox monetary policies, a stance that was consistently communicated to market participants.
Another significant reform, Cardoso stated, was the removal of fuel subsidy, which, along with multiple exchange rate inefficiencies, had cost the country approximately six per cent of its Gross Domestic Product (GDP) annually.
He acknowledged that previous administrations lacked the political will to remove the subsidy, but its elimination had had a profound positive impact on Nigeria’s fiscal outlook.
On financial sector reforms, Cardoso explained that CBN had mandated banks to recapitalise to strengthen the financial system and build buffers to withstand future economic shocks. He said these measures had so far proven successful in bolstering the sector.
Addressing the broader global economic climate, he emphasised the importance of tailoring policy decisions to each economy’s unique needs.
The central bank governor recounted how Nigeria continued to tighten monetary policy even when global trends suggested otherwise.
Despite the initial scepticism, he stated that a year later, many financial practitioners and international colleagues recognised that Nigeria had made the right decisions based on its specific economic conditions.
Speaking on the actions required to enhance financial inclusion and the role of digitalisation and financial technology in mitigating potential risks, the CBN governor referenced Nigeria’s experience, where the financial inclusion rate currently stood at 74 per cent. He stressed the critical need to expand this aggressively to ensure that economic growth benefited all segments of society.
As the economy rebounds, Cardoso emphasised reducing disparities and ensuring broad-based financial access.
Highlighting digitalisation as a key driver in advancing financial inclusion, he stated that expanding mobile money services, leveraging technology and prioritising gender-focused initiatives due to the positive economic impact of empowering women across the African continent would significantly close the financial access gap, particularly for underserved populations.
He reaffirmed CBN’s commitment to maintaining macroeconomic stability, sustaining policy consistency, and ensuring long-term resilience for the Nigerian economy.
The two-day event served as a key platform for addressing structural changes in the global economy and their impact on emerging markets.
In the meantime, Edun expressed government’s commitment to removing barriers that hindered youth participation in key sectors of the economy, including agriculture, manufacturing, and exports.
He urged young Nigerians to take advantage of available economic opportunities and actively engage with government policies.
Edun restated government’s dedication to unlocking the potential of Nigeria’s youth in order to drive economic growth and foster a more inclusive and sustainable economy.
In a statement made available to THISDAY, the minister disclosed that the President Bola Tinubu administration had put in place several initiatives aimed at enhancing youth participation and financial inclusion.
He expressed the federal government’s commitment to economic stability, investment, and youth empowerment in line with the Renewed Hope Agenda of the present administration.
Cardoso has asked for Stronger Economic bond with Middle East, Diaspora while in Riyadh.
Edun outlined key government initiatives designed to enhance youth participation and financial inclusion, including the Student Loan Programme, which he said over 100,000 students had benefited from, with N30 billion allocated.
He also cited the Digital and Creative Economy Fund, supporting youth-led businesses with a dedicated component for women entrepreneurs, as well as Consumer Credit Access, a government-backed initiative improving financial access for young Nigerians.
Commending AYF’s vision, Edun assured the delegation that the federal government remained focused on fostering an inclusive, vibrant, and sustainable economy for all.
Speaking earlier, National President of AYF, Ahmed Zagi, commended the finance ministry’s achievements under the Tinubu administration, particularly in the areas of job creation, poverty alleviation, and economic expansion in northern Nigeria.
Zagi stated that their mission was to discuss possible areas of collaboration with the government, with regard to job creation, economic empowerment, growth, and national development, especially as they benefited of the youth.
While acknowledging the government’s palliative efforts, Zagi appealed for further assistance ahead of the Ramadan fast, stating that the support would cushion the current economic challenges facing ordinary Nigerians.
MAN revealed that most commercial banks charged manufacturers between 35 per cent and 48 per cent lending rates in Q4, 2024. It made the revelation in the Q4, 2024 publication of MCCI, to measure changes in quarterly pulse of manufacturing activities in relation to movement in the macro-economy and government policies.
MCCI, which was released yesterday, also showed that manufacturers in Kaduna, Kano, Rivers/Bayelsa, Anambra/Enugu and Bauchi/Benue/Plateau industrial zones were yet to recover from the effects of the macroeconomic reforms of the Tinubu administration.
The report said, “Sequel to further hike in the benchmark interest rate from 27.25 per cent in September to 27.5 per cent in November 2024, manufacturers experienced increases in bank lending rates during the reviewed period.
“Most of the top commercial banks charged manufacturers between 35 per cent and 48 per cent lending rates in Q4, 2024. The exorbitant cost of borrowing has drastically constrained the sector’s access to credit.”
It stated that figures garnered in the report revealed that 76 per cent of manufacturers disagreed that bank lending rates encouraged their productivity in Q4, 2024.
The report further stated that 58.3 per cent of manufacturers interviewed disagreed that the size of commercial bank loans to the manufacturing sector encouraged productivity in Q4, 2024, while 36.5 percent agreed.
A breakdown of the MCCI by industrial zone showed that the lingering effects of macroeconomic reforms undermined the performance of operators within Kaduna (48.6), Kano (48) and Rivers/Bayelsa (48), Anambra/Enugu (46.2) and Bauchi/Benue/Plateau (45.4), as their confidence levels read below the 50-point threshold.
“These zones are yet to recover from the debilitating impact of the macroeconomic reforms. In particular, the power blackout in the northern region stalled operations in Kaduna, Kano and Bauchi/Benue/Plateau industrial zones during the period of review,” the MCCI said.
It added, “The contracted confidence in Kwara/Kogi, Anambra/Enugu, Imo/Abia and Edo/Delta industrial zones shows that the operators remain highly affected by the outrageous increase in electricity tariff, high borrowing cost as well as the effect of high exchange rate on cost of shipment.
“Despite the prevailing hostile macroeconomic environment, the operators in Abuja, Apapa, Ikeja, Ogun and Oyo/Ondo/Ekiti/Osun benefitted largely from the stable exchange rate and the seasonal increase in consumer demand during the period of review.”
The report also said that manufacturers in Ikeja (55.6), Kwara/Kogi (54.7), Apapa (53.4), Imo/Abia (53), Ogun (52.4), Abuja (52.1), Edo/Delta (51.2), Cross River/Akwa Ibom (50.8), Oyo/Ondo/Ekiti/Osun (50.8) industrial zones recorded index scores above the 50-point standard in the quarter under review.
The latest MCCI report stated that there was mild improvement in manufacturers’ sourcing of foreign exchange (FX), despite the increase in average exchange rate from N1,586/$ in Q3, 2024 to N1,623/$ in Q4, 2024.
It stated that further evidence based on data collected revealed that an average of 15.4 per cent of manufacturers’ FX demand was accessed at the official window compared to 14.5 percent in Q3, 2024.
The report said, “This was majorly attributed to the relative market stability driven by the increase in FX reserves, the introduction of the Electronic Foreign Exchange Matching System (EFMS) and the expansion of dollar sales to BDCs during the period of review.
“However, the rate of FX sourcing remains a challenge as 59.4 per cent of the respondents disagreed that the rate at which manufacturers source for FX has improved while 17.7 per cent were not sure.”
The MCCI also stated that 83.3 per cent of its respondents confirmed that over-regulation by the government agencies depressed manufacturing productivity during the period under review, while 86.1 per cent and 63.2 per cent, respectively, attested that multiple taxations and port gridlocks affected productivity in the sector negatively.
It said, “The result indicates that manufacturing operations remain heavily challenged by government over-regulation, multiple taxation and port gridlocks.”
