Review of two years Yemi Cardoso as CBN Governor

By Dr Muda Yusuf
The Central Bank of Nigeria (CBN) plays a pivotal role in shaping Nigeria’s macroeconomic trajectory. Over the past two years, under the leadership of Mr Yemi Cardoso, the CBN has undertaken comprehensive reforms aimed at restoring confidence, strengthening governance, and repositioning the financial system to support inclusive and sustainable economic growth. The Centre for the Promotion of Private Enterprise [CPPE] examines the achievements, challenges, and strategic priorities for the CBN moving forward.
Nigeria’s financial system has historically faced challenges, including foreign exchange market distortions, weak corporate governance, excessive monetary financing, and limited access to affordable credit. These issues contributed to macroeconomic instability, inflationary pressures, and suboptimal economic performance. The Cardoso-led CBN has sought to address these problems through bold reforms, focusing on transparency, stability, and credibility.
One of the most significant reforms under Mr. Cardoso has been the liberalization and unification of the foreign exchange (FX) market. Key outcomes include: the elimination of multiple FX windows reduced opportunities for arbitrage and corruption; greater confidence has attracted higher inflows from autonomous sources; price discovery has improved, allowing for a more efficient allocation of FX resources.
The CBN has made progress in improving governance and autonomy; reduced political interference in policy decisions, improving professionalism. Curtailed unrestrained monetary financing, reducing fiscal dominance and macroeconomic distortions. Maintaining confidence in the financial system has been a core priority: introduced recapitalization measures to enhance the soundness of banks; strengthened regulatory frameworks to safeguard stability in the face of global and domestic shocks. Through a mix of monetary policy tools—including interest rate hikes, liquidity management, and market reforms—the CBN has contributed to the recent deceleration in inflation and restoration of macroeconomic stability.
While necessary to combat inflation, the current stance is highly restrictive: Monetary Policy Rate (MPR) at 27.5% and Cash Reserve Ratio (CRR) at 50% have considerably pushed up the cost of funds; elevated lending rates have suppressed private sector borrowing, particularly in manufacturing, Agriculture, SMEs, real estate and other sectors; there is a growing risk that private investment could be displaced by high-yield government instruments. A fully market-based approach, while improving efficiency, has not addressed structural financing gaps: Small and medium enterprises face limited access to affordable credit; infrastructure, industrial, agricultural, construction, and real estate projects lack patient capital and affordable long-term funding mechanisms.
Calibrate CRR and MPR downward as inflation moderates to create a more enabling credit environment; complement monetary tightening with supply-side measures to address structural inflation drivers. Develop credit guarantee schemes and concessionary financing programs for SMEs and critical sectors of the economy. Promote development finance instruments and deepen the domestic bond market to mobilize resources for infrastructure. Entrench corporate governance standards to ensure continuity beyond current leadership. Strengthen legal frameworks that protect CBN’s autonomy from political pressures. Maintain clear and predictable policy communication to manage market expectations. Broaden consultation with industry players and development partners to foster inclusive decision-making.
The leadership of Mr. Yemi Cardoso has brought about a significant transformation of Nigeria’s financial system, with gains in transparency, credibility, and stability. The next phase of reform must focus on achieving a more balanced policy stance that supports growth while preserving macroeconomic stability. Addressing structural financing gaps and sustaining governance reforms will be critical for unlocking the financial sector’s full potential as a driver of inclusive economic development.
*Muda Yusuf is the CEO Center for the Promotion of Private Enterprise, CPPE