In the one year since Yemi Cardoso assumed office as Governor of the Central Bank of Nigeria (CBN), the naira has depreciated by over 51%, losing more than half of its value against the US dollar. According to data from FMDQ, the naira fell from N747.76/$1 on September 22, 2023, to N1,541.52/$1 as of September 20, 2024.
This sharp decline comes despite various efforts by the CBN to stabilize the local currency, including measures to boost Nigeria’s foreign exchange reserves. Over the past year, the nation’s forex reserves increased by $4.12 billion, rising from $33.28 billion in September 2023 to $37.39 billion by September 2024. However, this growth has not been enough to halt the naira’s depreciation, which remains under pressure from external economic challenges and domestic fiscal issues.
Interest Rate Hikes Amid Inflation Challenges
Under Cardoso’s leadership, the CBN raised the Monetary Policy Rate (MPR) four times, bringing it from 18.75% to 26.75%, with the latest increase occurring in July 2024. These rate hikes were part of the CBN’s strategy to combat inflation, which continues to affect Nigeria’s economy. The CBN’s Monetary Policy Committee (MPC) is expected to meet again on September 23-24, 2024, to decide on the future direction of interest rates.
Despite the rate hikes, inflation remains a significant challenge. Nigeria’s inflation rate, which peaked at 34.19% in June 2024, eased to 33.40% in July and further dropped to 32.15% in August. Financial experts have called for caution in further rate increases, with some advocating for a pause to stabilize the economy.
Expert Opinions on Cardoso’s Performance
Opinions on Cardoso’s first year in office have been mixed. Development economist Dr. Aliyu Ilias described Cardoso’s approach as “topsy-turvy,” criticizing the CBN governor for prioritizing inflation control over economic growth. He rated Cardoso’s performance as below average, noting that the recent inflation reductions were too marginal.
On the other hand, financial analyst Brian Essien offered a more balanced view, acknowledging the challenges Cardoso faced when he took office. He praised the CBN governor for achieving two consecutive months of declining inflation but stressed that more needs to be done to strengthen the naira and reduce the country’s reliance on the dollar. Essien also recommended that the CBN retain the current MPR to avoid negative economic impacts from further adjustments.
Bottom Line
As Yemi Cardoso marks one year as the Governor of the Central Bank of Nigeria, the naira continues to struggle despite efforts to stabilize the economy. While some progress has been made, including increased forex reserves and decelerating inflation, the significant depreciation of the naira highlights ongoing challenges. Experts agree that Cardoso’s approach needs refinement to strike a balance between controlling inflation and fostering economic growth.
