CBN: Nigeria’s External Reserves Hit $52bn, Net Reserves Top $40bn

Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, says Nigeria's external reserves have risen to approximately $52 billion, while the country's net external reserves have exceeded $40 billion, describing the development as one of the clearest indicators that recent monetary and foreign exchange reforms are yielding results.

Cardoso made the disclosure during a fireside chat with BusinessDay Chief Executive Officer, Frank Aigbogun, where he also expressed confidence that the ongoing recapitalisation of Nigerian banks would strengthen the financial system and enable lenders to play a bigger role in financing private-sector growth.

According to the CBN governor, the improvement in external reserves reflects growing investor confidence following reforms that have fundamentally changed the country's foreign exchange market.

Cardoso said Nigeria has moved away from an era characterised by multiple exchange rates and uncertainty to a more transparent and market-driven foreign exchange system.

"One of the most significant outcomes of our policies is the foreign exchange market. We have moved from a market characterised by uncertainty and multiple exchange rates to one where those distortions have disappeared. Today, the multiple exchange windows have been collapsed," he said.

He noted that the reserve position illustrates the scale of the turnaround achieved under the current monetary policy framework.

"The numbers speak for themselves. As of yesterday, we were hovering at about $52 billion in reserves. When we started, net reserves were in the region of about $3 billion. Today, our net reserves are in the $40 billion range.

"It has been a long and difficult journey, but there has been a regime change at the Central Bank, and that is what has produced these outcomes," Cardoso added.

The CBN governor said the improved macroeconomic environment has sparked renewed international interest in Nigeria, with investors closely monitoring opportunities in the country.

According to him, the restoration of stability has encouraged both investment discussions and actual capital inflows.

"We are seeing enormous interest from outside Nigeria. Investors are watching very closely. There has been a lot of engagement, and in some cases investments are already being made. You will hear more about these developments because of the stability that has been achieved," he said.

Cardoso, however, challenged Nigerian business leaders to respond quickly to the changing investment landscape.

"My hope is that our own business leaders and CEOs will recognise this. They should not be afraid or assume things are still the way they used to be. That would be the biggest mistake they could make.

"It should not be that by the time they wake up to the opportunity, the horse has already bolted," he warned.

Speaking on the ongoing banking recapitalisation exercise, Cardoso dismissed concerns that banks are increasingly investing in government securities instead of lending to businesses.

He acknowledged that the trend may persist in the short term but expressed confidence that stronger bank balance sheets would ultimately translate into increased lending to productive sectors of the economy.

"Short term, maybe it's not wrong. But long term, I'm confident that will change," he said.

Cardoso explained that the recapitalisation programme was designed primarily to strengthen the resilience of Nigerian banks and prepare them for future economic expansion.

"Our belief at the time was that we needed to build resilience in our banking system. Initially there was resistance, but in time there was clarity, and people could see that it was in their best interest.

"We are very happy and very proud of the outcome. Our banks more or less dominate the African continent, and with that comes the responsibility to maintain adequate capital.

"The outcome of this exercise has ensured that they are more resilient and better able to withstand shocks," he stated.

Cardoso stressed that raising fresh capital does not reduce regulatory oversight, noting that the CBN will continue close supervision of financial institutions.

He said stronger banks, combined with prudent regulation, would create the conditions necessary for sustained economic growth.

"Our oversight of banks does not stop because they have raised capital. It is going to be continuous because we need a strong and resilient banking sector to take us where we want to go," he said.

The CBN governor added that as inflation moderates and interest rates gradually decline, banks would become better positioned to expand lending to businesses, particularly small and medium-sized enterprises (SMEs).

"When these different actions begin to settle, inflation will come down, interest rates will come down, and it will be a different business environment.

"Banks will then be much better positioned. The environment has changed. I can already see many banks building the capacity needed to serve SMEs and other borrowers in the future," Cardoso said.

He expressed optimism that the combination of stronger reserves, a more stable foreign exchange market, resilient banks and improving investor confidence would support Nigeria's next phase of economic growth.