The Central Bank of Nigeria’s 2024 financial performance paints a picture of resilience and strategic progress, showcasing the institution’s unwavering commitment to fostering economic stability and prudent financial management. With notable improvements in external reserves, asset quality, cost efficiency, and a strengthened bottom line, the CBN’s latest results underscore its dedication to navigating Nigeria’s complex economic landscape
.Significant gains recorded in external reserves bolstered by effective monetary policies have continued to stabilize the naira and improve foreign exchange liquidity as an improved asset quality has reflected better risk management practices and reduced non-performing loans .Even the cost efficiency initiatives have also paid off, leading to reduced operational expenses and enhanced profitability. Indeed , those improvements have collectively contributed to a strengthened bottom line for CBN as indicated in its recently released financial results.
This resilience and strategic progress are evident in the CBN’s external reserves, which increased from $36.6 billion in 2023 to $38.8 billion in 2024. This growth is largely attributed to improved investor confidence, increased diaspora remittances, and better coordination with the Nigerian National Petroleum Company (NNPC), ultimately enhancing Nigeria’s ability to meet its international obligations, stabilize the Naira, and boost macroeconomic confidence.
The CBN’s financial performance showed a remarkable turnaround, from a deficit of ₦1.3 trillion in 2023 to a surplus of ₦165 billion in 2024, due to effective cost management, gains on investments, and increased income from foreign exchange transactions. This notable improvement underscores the Bank’s commitment to prudent financial management and its efforts to drive economic stability.
Furthermore, the CBN has made significant progress in reducing its loans and receivables from ₦16.1 trillion to ₦11.9 trillion, primarily due to recoveries from earlier intervention lending programs and a shift away from intervention lending. By allowing market mechanisms to drive credit allocation and financial sector development, the CBN is promoting a more sustainable economic growth trajectory.
In addition to these achievements, the CBN has implemented cost-saving measures and successfully adopted Internal Control over Financial Reporting (ICFR), enhancing transparency and accountability in financial reporting.
However, the CBN faced challenges, including increased liquidity management expenses and losses on settled derivative contracts, highlighting the complexities of managing the economy.
The Central Bank of Nigeria’s (CBN) expenses for liquidity management operations surged to ₦4.5 trillion in 2024 from ₦1.5 trillion in 2023. This increase was driven by the bank’s efforts to combat inflation through a tightening monetary policy stance, which involved conducting frequent and high-value Open Market Operations (OMO) to mop up excess liquidity. While this comes at a significant cost, it’s worth noting that in some jurisdictions, such expenses are borne by the government, highlighting the CBN’s role in maintaining financial stability on behalf of the Federation.
The bank’s financial statements reveal a significant increase in loss on settled derivative contracts, rising from ₦6.3 trillion in 2023 to ₦13.9 trillion in 2024. This substantial loss stems from the settlement of legacy derivative contracts, which were undertaken as a strategic move to reduce outstanding foreign exchange liabilities and FX exposure. By proactively addressing these legacy transactions, the bank aims to boost net foreign reserves, enhance investor confidence, restore credibility to Nigeria’s forward markets, and transparently settle obligations, ultimately strengthening the country’s external buffer and financial stability.
Ultimately, the CBN’s 2024 financial performance reflects its commitment to economic stability, sound policy implementation, and strategic financial management. By reinforcing governance and accountability, and pursuing a balanced monetary policy stance, the Bank’s leadership has repositioned the CBN as a credible monetary authority, setting the stage for a more stable and prosperous economic future.
The CBN Reforms That Deliver the Resilience and Strategic Progress
Olayemi Cardoso’s policies as the Central Bank of Nigeria (CBN) governor have been distinct from his predecessors in several key areas. His approach to monetary policy has been marked by a series of interest rate hikes to combat inflation, with the Monetary Policy Committee (MPC) increasing the interest rate by 50 basis points to 27.25% in July 2024. This approach differs from previous governors, as it aims to rein in inflation through monetary tightening.
Cardoso’s commitment to price stability is evident in his plan to transition to an inflation-targeting framework, which marks a shift from the previous monetary policy approach. This move is expected to help anchor inflation expectations and promote economic stability.
In the area of foreign exchange policy, Cardoso lifted the eight-year restriction on accessing foreign exchange for the importation of 43 items, including rice and vegetable oil, which was imposed by his predecessor, Godwin Emefiele. This move aims to improve foreign exchange liquidity and stabilize the naira. Additionally, the CBN, under Cardoso, cleared $7 billion in valid forex backlog to ensure forex liquidity and stabilize the exchange rate.
Cardoso’s banking sector reforms are also noteworthy. He initiated a bank recapitalization exercise, requiring commercial banks to increase their minimum capital base. This move aims to strengthen banks’ capacity to support economic growth and development.
Furthermore, Cardoso emphasizes the importance of collaboration between the CBN and the fiscal authority to address economic challenges and promote stability. He hosted a Monetary Policy Forum to engage stakeholders and discuss strategies for managing disinflation and promoting economic stability. These efforts demonstrate his commitment to transparency and collaboration in monetary policy decision-making.
Overall, Cardoso’s policies have been shaped by his commitment to price stability, economic growth, and financial sector development. His approach differs from his predecessors in several key areas, and it remains to be seen how these policies will impact the Nigerian economy in the long term.
