Cardoso’s CBN reforms restored confidence, but growth still constrained

The Centre for the Promotion of Private Enterprise (CPPE) has commended Central Bank of Nigeria (CBN) governor Yemi Cardoso for reforms that restored confidence in the financial system, but warned that the gains risk being undermined if growth remains constrained by tight monetary policies.

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In a two-year review of Cardoso’s leadership on Sunday, CPPE said Nigeria’s apex bank had taken bold steps to improve transparency, credibility and governance.

It highlighted the unification of the foreign exchange (FX) market, curbing excessive monetary financing, and strengthening bank recapitalisation measures as key milestones.

“Transparency and credibility have improved, with the elimination of multiple FX windows reducing arbitrage and corruption,” CPPE chief executive Muda Yusuf said.

The report noted that inflation had decelerated in recent months due to monetary tightening, but warned that the cost had been steep. With the Monetary Policy Rate at 27.5 per cent and Cash Reserve Ratio at 50 per cent, borrowing costs have soared, making it harder for businesses to access credit.

According to CPPE, elevated lending rates have “suppressed private sector borrowing, particularly in manufacturing, agriculture, SMEs, real estate and other sectors.” It added that government securities offering high yields are crowding out private investment.

The think-tank urged the CBN to balance its fight against inflation with growth concerns, suggesting a gradual easing of rates and cash reserve requirements once inflationary pressures ease. It also called for targeted interventions to close structural financing gaps, including credit guarantee schemes for small businesses and long-term capital for infrastructure and industry.

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“The next phase of reform must focus on achieving a more balanced policy stance that supports growth while preserving macroeconomic stability,” the CPPE said.

The group also stressed the importance of institutionalising governance reforms, safeguarding the CBN’s autonomy from political interference, and maintaining clear policy communication to build trust among market participants.

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Mr Cardoso, a former chairperson of Citibank Nigeria, took office in September 2023 during strained public confidence in the central bank. His tenure has coincided with broader reforms by President Bola Tinubu’s government, including the removal of fuel subsidies and exchange rate liberalisation, which have triggered inflationary shocks but are seen as steps toward a more sustainable economy.

CPPE said the reforms had created a stronger foundation but warned that unless structural financing gaps are addressed, sectors critical for inclusive growth may continue to struggle.