Two years of Cardoso: Steering CBN through turbulent waters

In what experts have described as a pivotal two years at the helms of affairs of Nigeria’s Apex Bank, Olayemi Cardoso has been able to with zeal and zest steady the country’s financial waters; Omeiza Bilal writes.

It has been exactly two years since Dr. Olayemi Michael Cardoso, a seasoned financial expert with a global pedigree, assumed the helm of the Central Bank of Nigeria (CBN) on October 5, 2023.

Nominated by President Bola Tinubu on September 15, 2023, and confirmed by the Senate on September 26, Cardoso stepped into a cauldron of economic chaos. Nigeria, Africa’s largest economy, was reeling from years of multiple exchange rates, rampant inflation, depleted foreign reserves, and a naira that had lost over 70% of its value against the dollar in the preceding months.

The previous administration’s unorthodox policies, including the controversial naira redesign, had exacerbated cash shortages and eroded public trust in the financial system.

Cardoso, a Harvard-trained economist and former chairman of the Association of Issuing Banking Companies of West Africa, brought a reputation for transparency and reform-mindedness. His pre-CBN career spanned advisory roles at the Boston Consulting Group, directorships in major Nigerian banks, and board memberships at global institutions like the Global Alliance for Vaccines and Immunization (GAVI).

At 62, Cardoso inherited a CBN marred by scandals, including allegations of illicit forex allocations under his predecessor, Godwin Emefiele.

In his inaugural address, Cardoso pledged a “return to first principles,” emphasizing orthodox monetary policy, investor confidence restoration, and a clean break from fiscal dominance.

Two years on, as Nigeria navigates a post-subsidy era and global headwinds like oil price volatility, Cardoso’s tenure stands as a testament to bold experimentation amid inherited fragility.

Early reforms: Laying the foundation for stability

Cardoso’s first 100 days were marked by surgical strikes against structural distortions. The most audacious move came in June 2023—technically under the interim leadership but accelerated by Cardoso—unifying Nigeria’s fragmented foreign exchange (FX) market. Prior to this, parallel rates (official, investors & exporters, parallel) created arbitrage opportunities and deterred inflows, with reserves dipping to a precarious $33 billion in September 2023.

By scrapping the pegged rate and allowing market-driven pricing, Cardoso dismantled a system that had funneled billions into shadowy deals.

Clearing a $7 billion FX backlog for importers, airlines, and manufacturers was another cornerstone. Announced in October 2023, this initiative, funded partly by reserve drawdowns and diaspora remittances, alleviated immediate pressures on sectors like aviation and pharmaceuticals.

“We strengthened reserves, now standing above $42 billion, and created new channels for diaspora remittances and investments,” Cardoso noted in a recent address, crediting these steps for boosting FX inflows by 150% year-on-year in early 2025.

In November 2023, Cardoso unveiled Nigeria’s first formal Inflation Targeting Framework (ITF), a paradigm shift from the ad-hoc monetary stance of prior years. Anchored on a 9-15% medium-term band, the ITF mandated quarterly transparency reports and coordination with fiscal authorities to curb money supply growth. This was complemented by halting direct CBN financing of the federal deficit, a practice that had ballooned the money supply by 20% annually pre-2023.

Analysts at the Centre for the Promotion of Private Enterprise (CPPE) hailed these as “targeted reforms” that restored credibility, though implementation lagged due to data gaps in real-time inflation tracking.

These early actions signaled a departure from the CBN’s politicized past. Cardoso’s team digitized FX allocations, introducing the Electronic Foreign Exchange Matching System (EFEMS) to enhance transparency and reduce human intervention. By mid-2024, FX auction distortions had plummeted by 80%, per CBN data, fostering a more predictable market. Yet, the transition was painful: the naira depreciated 40% in late 2023, sparking import cost surges and street protests.

Monetary policy: Reining in inflation

Cardoso’s monetary playbook has been unapologetically hawkish, prioritizing price stability over short-term growth. Upon assuming office, the Monetary Policy Rate (MPR) stood at 18.75%; by March 2024, aggressive hikes had pushed it to 26.25%, the highest in CBN history.

This tightening, justified by food inflation exceeding 35%, aimed to anchor expectations and attract carry-trade inflows. “Without bold reforms like unifying the exchange rate and hiking rates earlier, things could have been worse,” Cardoso reflected in the CBN’s May 2025 Update.

Inflation, which peaked at 34.6% in November 2024, began easing in Q1 2025, dipping to 21.88% by July— a 37% decline from its zenith. The National Bureau of Statistics attributes this to base effects from subsidy removal and tighter liquidity, with food prices stabilizing as harvests improved. Cardoso projects further moderation to 15-18% by year-end, contingent on fiscal discipline.

The naira, too, has shown resilience. From a low of ₦1,600/$ in June 2024, it appreciated to around ₦1,450/$ by September 2025, buoyed by $2.5 billion in monthly inflows via the International Money Transfer Operators (IMTO) window. Reforms like the January 2025 FX Market Conduct Code imposed ethical standards on dealers, curbing speculation and narrowing the parallel-official spread to under 5%.

In a pivot signaling optimism, the September 2025 Monetary Policy Committee (MPC) meeting cut the MPR by 50 basis points to 27%, alongside slashing the Cash Reserve Ratio (CRR) to 45% for commercial banks. This easing aims to unlock credit for SMEs, which have faced borrowing costs above 30%.

Banking sector overhaul: Recapitalisation and resilience

No review of Cardoso’s tenure omits the banking recapitalization drive, launched in July 2024. Raising minimum capital from ₦25 billion (2005 levels) to ₦500 billion for international banks, the policy seeks to fortify balance sheets against FX shocks and non-performing loans, which hit 5% in 2023.

As of September 24, 2025, 14 banks—including giants like Zenith and GTBank—have complied, injecting over ₦2 trillion via rights issues and mergers. Cardoso’s transparent recruitment of 16 directors in March 2025, via open competition, further signaled a merit-based culture, breaking from nepotistic promotions.

These changes have enhanced systemic resilience. Stress tests reveal banks now hold 20% more Tier-1 capital, reducing failure risks amid global rate volatility. The recap has also spurred mergers, consolidating the sector from 23 to potentially 15 players.

Economic ripples: Growth amid guarded optimism

The macroeconomic dividends are tangible. Foreign reserves surged 27% to $42 billion, providing six months of import cover and shielding against oil dips. GDP growth, stagnant at 2.5% in 2023, is forecasted at 4.17% for 2025, per CBN projections, driven by non-oil sectors like services (up 5.2%). Diaspora remittances hit $25 billion in 2024, a record, thanks to incentives like the Non-Resident Account (NRA) yielding 5% interest.

Debt servicing eased dramatically, from $540 million in January 2024 to $276 million by February, as FX stability lowered dollar-denominated outflows. Investor sentiment has rebounded: FDI inflows rose 40% in H1 2025, with portfolio investments in bonds tripling.

The IMF’s April 2025 Article IV mission commended Cardoso for “reducing vulnerabilities,” though it flagged fiscal slippages as a drag.

Challenges and the shadow of criticism

Despite gains, Cardoso’s orthodoxy hasn’t been painless. High rates have cramped private credit growth to 1.2% in 2024, stifling SMEs and manufacturing, which contracted 2.1%.03

Critics, including labor unions, decry the “fierce policies” as anti-growth, with unemployment ticking up to 5.3%. Persistent forex shortages, exacerbated by oil theft, keep the parallel rate volatile, fueling black-market premiums.

Moreover, external shocks—global inflation and U.S. rate hikes—have tested resolve, with Cardoso defending CBN independence against fiscal pressures.

Looking ahead: Steady hand at the till?

As Cardoso enters year three of his five-year term, accolades abound. In May 2025, he received the African Banker Magazine’s Central Bank Governor of the Year for “bold leadership.”

The horizon holds promise: full ITF rollout by 2026, digital currency expansions, and green finance initiatives. Yet, success hinges on fiscal-monetary synergy and oil revenue discipline. Cardoso’s tenure, though turbulent, has injected professionalism into the CBN, proving that transparency can rebuild trust in Africa’s economic powerhouse. As he quipped at a recent event, “Reforms are like surgery—painful, but essential for healing.”

Nigeria’s recovery, under his watch, is no longer a distant dream but a work in progress.