Who is involved
Nigeria’s financial system faced severe strain in 2023, primarily due to a weakening currency and rising inflation. The Central Bank of Nigeria (CBN) was at the forefront of addressing these challenges, as inflation surged from 15.4% in November 2021 to a staggering 22.4% by 2023. This environment prompted a critical reassessment of monetary policies and exchange rate management.
In a decisive move, the CBN dismantled its multiple exchange-rate regime, transitioning to a willing-buyer, willing-seller framework. This change was pivotal, as it aimed to narrow the significant gap between official and parallel market rates, which had reached an alarming 60%. By late 2025, this gap had narrowed to under 2%, illustrating the effectiveness of the CBN’s reforms.
The immediate effects of these changes were felt across various sectors. Inflation peaked at 34.80% in December 2024, a reflection of the tumultuous adjustments within the economy. However, by October 2025, inflation had declined to 16.05%, showcasing a significant turnaround. The CBN also raised interest rates from 18.75% in 2023 to 27.5% by late 2024, a move aimed at controlling inflation and stabilizing the naira.
Furthermore, the CBN launched a bank recapitalization program in 2024, requiring higher capital thresholds for financial institutions. This initiative led to more than 33 banks raising fresh capital through public offers and rights issues by March 2026, reinforcing the banking sector’s resilience and capacity to support economic growth.
Experts have noted the CBN’s efforts as a remarkable turnaround for Nigeria’s financial landscape. Christopher Jeffery remarked, “The CBN’s leadership team has demonstrated plenty of courage and the CBN showed significant institutional strength to facilitate the rebuilding of unencumbered FX reserves and declining inflation, facilitating measurable progress toward sustainable growth and enhanced financial inclusion.” Such endorsements highlight the importance of the CBN’s reforms in restoring trust in Nigeria’s financial system.
The CBN’s reforms have also included addressing outstanding obligations in the foreign exchange market, clearing billions of dollars in unmet obligations that had previously hampered economic stability. As of November 2025, Nigeria’s external reserves had climbed to 46.7 billion dollars, up from 49 billion dollars, reflecting a more robust financial position.
In recognition of these achievements, Nigeria’s Central Bank was named Central Bank of the Year 2026 in London, a testament to its successful navigation through turbulent economic waters. The CBN’s adoption of tighter monetary policies has not only aimed at controlling inflation but also at stabilizing the naira, crucial for fostering a conducive environment for investment and growth.
As the CBN continues to implement these reforms, the focus remains on sustaining the progress made and ensuring that the financial system can withstand future challenges. The path forward is promising, but details remain unconfirmed regarding the long-term impacts of these reforms on Nigeria’s economic landscape.