Governor of the Central Bank of Nigeria, Olayemi Cardoso | Credit: CBN As the Middle East crisis continues to unsettle economies and test resilience, SAMI TUNJI examines how the Central Bank of Nigeria’s recent reforms are influencing the country’s capacity to absorb external shocks, how effective those measures have been, and the areas where vulnerabilities persist Nigeria’s economy is navigating one of its most delicate phases in recent years, as global uncertainty continues to test the resilience of emerging markets.
From the ongoing Middle East crisis to tighter global financial conditions and persistent inflationary pressures, external shocks have remained a constant threat to macroeconomic stability. For a country historically vulnerable to oil price swings, capital flow reversals and exchange rate volatility, the key question is no longer whether shocks will occur, but whether the underlying structure of the economy can absorb them without significant disruption.
Recent policy shifts led by the CBN under its Governor, Olayemi Cardoso, have sought to rebuild confidence, restore policy credibility and strengthen macroeconomic buffers. While the outcomes of these reforms remain subjected to scrutiny, emerging data and institutional assessments suggest that Nigeria has begun to reposition itself to better withstand external pressures.
However, this resilience remains conditional, as structural constraints and fiscal vulnerabilities continue to shape the economy’s outlook. Reforms, stability rebuilding The recent wave of reforms did not emerge in isolation but shaped by a period of sustained macroeconomic imbalance.
Prior to the policy shift, Nigeria’s economy was constrained by a fragmented foreign exchange system, persistent CBN financing of fiscal deficits, declining investor confidence and pressure on external reserves. These distortions created uncertainty, discouraged capital inflows and weakened monetary policy effectiveness.
In response, the CBN implemented structural adjustments to restore order. Central to this effort was the liberalisation and unification of the foreign exchange market, which replaced multiple exchange rate windows with a more transparent framework. The clearance of an estimated $7bn FX backlog further reduced uncertainty for investors and improved price discovery in the currency market.
These reforms were designed to rebuild investor confidence and enhance long-term sustainability. Multilateral institutions, including the World Bank, have acknowledged the role of these changes in improving Nigeria’s economic outlook. The halt of CBN financing of fiscal deficits marked another critical shift.
Direct financing had contributed to excess liquidity and inflationary pressure. Its reduction signalled a move toward orthodox monetary policy and reinforced policy discipline. These measures were complemented by fiscal adjustments, including subsidy reforms and revenue mobilisation efforts.
While outside the CBN’s direct control, their interaction with monetary policy has shaped macroeconomic outcomes. The result has been a gradual rebuilding of macroeconomic buffers. External reserves have improved at intervals, supported by capital inflows and diaspora remittances.
Access to foreign exchange through official channels has become more predictable compared to previous years. Cardoso noted that Nigeria receives about $600m monthly from diaspora remittances, providing a steady source of foreign exchange. Nigeria’s return to international capital markets and improved sovereign risk perception further reflect renewed investor interest.