If you’ve been watching Nigeria’s economy closely, you know the past few years have been rough on the naira and everyday Nigerians. For a long time, multiple foreign exchange rates, stubborn inflation, dwindling reserves, and budget deficits created a chaotic economic environment. Prices soared, businesses struggled to access dollars for imports, and consumer confidence plummeted. It wasn’t just numbers on paper; it was felt in every market, every home, and every wallet.
Enter Governor Olayemi Cardoso and his bold new reform agenda. Launched just 30 days ago, these reforms aimed to reset the economic playing field through comprehensive changes to monetary policy, the foreign exchange market, and fiscal governance. The goal? Stabilize the naira, curb inflation, restore investor confidence, and ultimately pave the way for sustainable growth.
After one month of intense implementation, it’s time to take stock. Who has benefited? Who has been challenged? And what do the early economic indicators tell us about Nigeria’s future? This article offers a detailed, fact-based, and clear-eyed assessment of Cardoso’s one-month FX reform scorecard.
The Reform Agenda: Key Measures Implemented
Understanding why these reforms were necessary is just the first step. Let’s dive into what exactly Governor Cardoso and the Central Bank of Nigeria (CBN) have done.
Monetary Policy Adjustments
One of the earliest and most aggressive moves was tackling Nigeria’s persistently high inflation, which hovered around 34 to 35 percent in recent months. The CBN raised the Monetary Policy Rate (MPR) from 18.75% to 27.5%, a sharp increase of 875 basis points. This hike was designed to tighten money supply by making borrowing more expensive, which discourages excessive lending and spending that fuel inflation.
Complementing this was a significant increase in the Cash Reserve Ratio (CRR) to 50%. This means commercial banks now have to hold half of their deposits with the CBN, drastically reducing the money available for lending. Such liquidity tightening aims to reduce inflationary pressure and stabilize the currency by limiting excess naira in circulation.
This dual approach marks one of the most forceful monetary policies Nigeria has seen in recent history, underscoring the urgency the CBN places on taming inflation and stabilizing the economy.
Foreign Exchange Market Reforms
The FX market was the heart of the reform package. For years, Nigeria struggled with multiple exchange rate windows—the official rate, Investors and Exporters (I&E) window, autonomous market, and a sprawling parallel market. This fragmented system created large disparities in currency value, encouraged corruption, and distorted the economy.
To fix this, the CBN unified the exchange rates into a single market, drastically narrowing the gap between the official and parallel rates, which sometimes exceeded 100%. This unification enhances transparency, reduces arbitrage opportunities, and boosts market confidence.
A critical component was clearing over $7 billion in backlogged foreign exchange commitments that had caused supply chain bottlenecks and driven import costs higher. The backlog clearance was a vital step in restoring trust with importers and foreign suppliers.
Technologically, the launch of the Electronic Foreign Exchange Matching System (EFEMS) automated the allocation and settlement of forex trades. This automation limits human interference, reducing corruption risks and improving efficiency in currency distribution.
Fiscal Discipline Measures
On the fiscal side, the reforms ended the CBN’s “Ways and Means” financing—essentially central bank funding of government deficits—which had ballooned to over N22 trillion by 2023. Ceasing this practice signals a commitment to fiscal discipline, as financing deficits through the central bank tends to be inflationary and destabilizes the currency.
Moreover, the CBN lifted foreign exchange restrictions on 43 items, including staples such as rice and milk, previously barred from official dollar access. This liberalization aims to remove artificial scarcity and reduce the inflated prices caused by forex rationing.
Collectively, these reforms are designed to stabilize the naira, control inflation, improve market efficiency, and restore fiscal responsibility. But sweeping reforms always create winners and losers—and their effects are already beginning to show.
Winners: Beneficiaries of the Reforms
Thirty days in, several groups stand out as clear winners, reaping early benefits from the policy changes.
Foreign Investors
Foreign investors have returned with renewed confidence. Years of erratic currency policies and multiple exchange rates had scared off many international investors, but Cardoso’s decisive reforms sent a strong signal that Nigeria is serious about stability.
Portfolio inflows surged by over 72% in the first half of 2024, as international investors poured money into Nigerian stocks and bonds. The unified exchange rate regime eliminated risks of hidden currency losses from rate disparities, making investments more predictable and attractive.
This return of capital is critical—not just for the money it brings, but for the confidence and legitimacy it restores to Nigeria’s financial markets. It lays the groundwork for further economic growth and job creation.
Manufacturers
Manufacturers, especially those reliant on imported raw materials, also benefited immediately. Previously, these businesses faced a nightmare trying to access dollars, often turning to the parallel market with its exorbitant and unpredictable rates. This inflated costs and caused production disruptions.
With the clearance of $7 billion in forex backlogs and unified market access, manufacturers now enjoy more reliable, fairly priced foreign exchange. This lowers import costs, helping stabilize production expenses and improve output.
Moreover, the reduced gap between official and parallel market rates discourages black market dealings, decreasing financial and legal risks for manufacturers.
Consumers
Consumers, though still feeling inflation’s squeeze, are beginning to benefit from increased product availability and more stable prices. The removal of FX bans on essential items such as rice and milk has eased shortages, reducing the price spikes caused by scarcity.
Better availability means that households, while still stretched, are facing somewhat less volatility in food prices. This improved supply chain environment is a crucial early win for consumers.
In short, foreign investors are coming back, manufacturers have improved dollar access, and consumers are seeing more goods on shelves. These winners show the reforms’ potential to drive recovery and stability.
Losers: Groups Facing Challenges Post-Reforms
As with any major reform, not everyone benefits equally. Some groups are facing significant challenges in the new environment.
Local Producers of Previously Restricted Items
By lifting dollar bans on 43 items, the government opened Nigerian markets to cheaper imports. While good for consumers, this puts local producers—like rice farmers and millers—under intense competitive pressure.
Previously protected by limited import competition, many local manufacturers now face shrinking profit margins and tougher survival battles. This threatens jobs and local production capacity in the short term.
Speculators and Arbitrageurs
Speculators who profited from the wide spreads between multiple FX rates are losing out. The unified market and EFEMS system have sharply curtailed arbitrage opportunities, reducing illicit profits.
Though positive for economic integrity, these changes represent a significant loss for those who thrived in the old, inefficient system.
Low-Income Households
Despite the reforms, inflation remains high—headline inflation hovered around 34.8% in December 2024. Food inflation is especially painful, putting a heavy strain on low-income households.
The rising cost of essentials, coupled with higher interest rates that tighten credit availability, means many families face ongoing hardship. Informal sector workers and small businesses, reliant on easy access to credit, are particularly vulnerable.
These losers highlight the difficult balancing act reforms entail: necessary economic corrections that also produce real hardship. Mitigating these effects will require thoughtful policy support and social programs.
Economic Indicators After 30 Days: What the Numbers Reveal
Hard data gives us an objective lens to assess the reforms’ early impact.
Exchange Rate Stabilization
The naira’s exchange rate has shown marked stabilization. Where the parallel market once traded at over ₦1,000 to $1 and official rates around ₦460, these have converged significantly.
By December 2024, the unified rate hovered near ₦480 to $1, and the parallel market around ₦520 to $1. This reduced gap shows restored market confidence and fewer arbitrage opportunities.
Inflation Trends
Inflation remains stubbornly high but shows signs of moderation in core areas. Headline inflation ticked up slightly from 34.5% to 34.8%, reflecting ongoing supply issues and external pressures.
Core inflation, excluding volatile food and energy prices, edged down from 18.3% to 17.7%. This suggests the monetary tightening is beginning to curb underlying price pressures.
Foreign Exchange Reserves
Nigeria’s forex reserves improved, rising from about $33 billion in September 2023 to $40 billion in December 2024. This boost, helped by backlog clearances and foreign inflows, strengthens Nigeria’s external buffer and currency stability.
Credit Growth and Liquidity
Credit growth slowed sharply due to higher interest rates and the 50% CRR requirement. Banks have become more cautious, limiting new loans. While this slows short-term economic activity, it is a deliberate step to rein in inflation.
The indicators reflect a cautiously optimistic trajectory: currency stabilization, better reserves, slowing inflation core pressures, and tighter credit. These align with policy goals but also signal continuing challenges.
Implications for Nigeria’s Economic Future
What do these early results mean for the road ahead?
Toward Sustainable Currency Stability
The narrowing exchange rate gap and growing reserves set the stage for sustained currency stability—essential for business planning and investment.
Maintaining this requires ongoing fiscal discipline, avoiding deficit monetization, and transparent communication to prevent market shocks.
Inflation Control Remains Critical
Despite early progress, inflation’s persistence demands coordinated policies beyond monetary tightening. Improving supply chains, agriculture, and infrastructure is crucial to reduce food prices sustainably.
Social safety nets will be needed to shield vulnerable populations from ongoing inflation impacts.
The Role of the Private Sector
Manufacturers and local producers must adapt rapidly to increased competition and currency realities. Investments in productivity, innovation, and exports will be key.
Government support in technology, capacity building, and export promotion can help local businesses compete and grow.
Fiscal Discipline and Governance
Ending central bank financing of deficits is vital, but broader fiscal reforms are needed to address Nigeria’s budget deficits and revenue volatility.
Improving tax systems, reducing waste, and strengthening governance will build investor trust and ensure reform durability.
Potential Risks and Uncertainties
External shocks like oil price volatility or geopolitical tensions could disrupt progress. Political resistance to reforms may delay or weaken implementation.
Close monitoring and flexibility in policy response are necessary to navigate these risks.
Cardoso’s FX reforms after 30 days present a mixed but hopeful picture. The comprehensive measures have stabilized the currency, revived investor confidence, and improved access to foreign exchange, benefiting investors, manufacturers, and consumers.
At the same time, local producers face tough competition, speculators lose arbitrage gains, and low-income Nigerians continue to feel inflation’s harsh bite.
Key economic indicators confirm progress in exchange rate unification, reserve rebuilding, and monetary tightening, though inflation remains a challenge.
The path forward demands continued fiscal discipline, coordinated policymaking, and support for those most affected. Transparent communication and sustained commitment will be critical to maintaining confidence.
For Nigeria, this reform period is a pivotal turning point. The foundation is being rebuilt for a more stable and prosperous economy. But the real test lies ahead—in maintaining momentum and ensuring reforms translate into inclusive growth and improved livelihoods.
The next months and years will determine whether this bold effort delivers the transformative change Nigeria so desperately needs.
If you want to dig deeper into specific sectors or policies, or need tailored guidance on navigating this new economic landscape, I’m here to help. This is a critical moment for Nigeria, and understanding it fully is the first step to thriving in the new reality.
