The Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, has forecasted that Nigeria’s economy will grow by 3.2% in 2024 and 3.3% in 2025, with a long-term growth rate projected at 4.3%.
Cardoso shared these insights while addressing the House of Representatives Committee on Banking, where he outlined the CBN’s policies and strategies to address domestic macroeconomic challenges.
He noted that the non-oil sector remains a strong contributor to Nigeria’s GDP, accounting for 94.30% and sustaining a steady growth rate of 2.80%.
Additionally, the oil sector has shown significant recovery, with growth rising to 10.15% in the second quarter of 2024, up from 5.70% in the first quarter.
This improvement is largely attributed to enhanced security measures that have bolstered crude oil and natural gas production.
He highlighted the strong performance of the services sector, which remains the primary driver of the economy, contributing 58.76% to GDP with a growth rate of 3.79%.
The industrial sector has also seen significant improvement, with its growth rate surging to 3.53% from 0.31%. The agricultural sector’s contribution to GDP increased, with growth rising to 1.41% from a previous contraction of -0.90%, signaling a positive shift in productivity.
Cardoso also noted a substantial improvement in Nigeria’s foreign exchange reserves, which grew by 12.74% to $39.12 billion by October 2024, driven by foreign capital inflows and receipts from crude oil-related taxes.
Remittance flows now represent 9.4% of total external reserves.
The current account surplus and trade balance also showed significant improvements during the second quarter of 2024.
On inflation, Cardoso reported a gradual deceleration from 34.19% in June 2024 to 32.15% by August 2024, attributing the trend to aggressive monetary policy measures.
He stated that inflation is expected to decline further in the near-to-medium term as the CBN continues to tighten policy rates and coordinate effectively with fiscal authorities.
To tackle inflation, the CBN has raised the policy rate by 850 basis points to 27.25%, adjusted the Cash Reserve Ratio, and normalized Open Market Operations as its main liquidity management tool.
Additionally, the Bank has implemented an Inflation-Targeting (IT) framework to stabilize prices and enhance liquidity management.
Governor Cardoso also addressed the banking sector, outlining the CBN’s recapitalization efforts aimed at increasing the capital base of banks to support Nigeria’s ambition of becoming a $1 trillion economy by 2030.
He noted that banks must meet new capital requirements by March 2026, with options for mergers, acquisitions, and new equity issuance available.
In conclusion, Cardoso expressed optimism regarding Nigeria’s economic future, highlighting the country’s strong potential for growth in the non-oil, oil, and industrial sectors.
He reassured that despite global economic uncertainties and domestic challenges, the CBN’s reforms are producing positive outcomes, evidenced by increased investor confidence, capital inflows, and overall stability in the financial system.
