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In an interview with The Africa Report, the Nigerian president argues that tough decisions have stabilised the economy. Now he wants taxation, national champions and megaprojects to deliver the payoff.

By Nicholas Norbrook in Kigali

…Says credit to SMEs surged to N199bn

Nigeria’s foreign exchange reserves have recovered to levels recorded before the disruptions linked to the US-Isreal-Iran war, as the Central Bank of Nigeria (CBN) insisted that it is no longer aggressively intervening in the foreign exchange market to defend the naira.

Governor of the CBN, Olayemi Cardoso, disclosed this while responding to questions after the Monetary Policy Committee (MPC) meeting in Abuja on Wednesday.

Cardoso said the structure of Nigeria’s foreign exchange market has changed significantly under the ongoing reforms introduced by the apex bank, adding that increased market liquidity has reduced the need for heavy intervention by the CBN.

According to him, daily foreign exchange market turnover has risen sharply from about $100 million when the current administration took office to roughly $550 million presently, with transactions occasionally climbing to as high as $1 billion in a single day.

He said the apex bank expects turnover to consistently hit the $1 billion mark in the future as more reforms take effect.

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“The foreign exchange system has changed considerably,” Cardoso said. “Where you already have a deepening foreign exchange market where liquidity rules the day, there’s very little need for you to intervene. The market operates largely on its own.”

The Governor explained that CBN intervention currently accounts for only about 1.2 to 1.3 per cent of total foreign exchange market turnover in 2025, a development he said reflects the growing strength of the market.

He added that the market is now increasingly driven by willing buyer-willing seller dynamics, while transparency and equal access to information have helped restore confidence among investors and market participants.

Cardoso also dismissed concerns over fluctuations in Nigeria’s foreign reserves, saying movements in the reserves are normal because the country continues to meet government obligations and external loan repayments.

“What we have done, which is normal, is that in the course of daily activities, there may be need to meet requirements of various arms of government or loans outstanding. They have to be paid,” he said.

The Governor, however, noted that inflows continue to replenish the reserves as outflows occur, adding that the country’s reserve position has already recovered to levels recorded before recent geopolitical disruptions linked to the US-Isreal-Iran conflict.

He expressed confidence that reserves would continue to improve in the coming months as reforms deepen.

Cardoso also said Nigeria had recorded 11 consecutive months of disinflation before the recent inflationary pressure triggered mainly by external shocks.

He explained that buffers created through ongoing reforms helped cushion the economy during the difficult period, while the recent upgrade by S&P Global Ratings showed that international institutions were beginning to acknowledge the impact of the reforms.

According to him, the CBN will continue with its current policy direction to sustain the fight against inflation and stabilise the exchange rate.

He described exchange rate stability as the centrepiece of the apex bank’s policy toolkit and stressed the need for stronger collaboration between monetary and fiscal authorities to reduce inflationary pressures in the economy.

On reforms in the foreign exchange market, Cardoso said the newly introduced FX Manual forms part of broader efforts aimed at deepening transparency, consistency and stability in the market.

He noted that the last major revision of the FX Manual was done in 2017, making the latest update necessary because of changes that have taken place in the financial system over the years.

The Governor said the revised FX Manual would take effect from June 1 and would be made freely available on the CBN website, while physical copies would also be distributed free of charge to stakeholders.

“We feel it is important that all stakeholders should have a copy, so they don’t need to feel as if information is hidden from them,” he said.

Cardoso explained that the manual would make it easier for exporters who previously kept export proceeds outside the country to bring foreign exchange earnings back into the Nigerian financial system.

He added that the reforms would also provide easier and more flexible access to foreign exchange for Nigerians and businesses.

According to him, Nigerians can now use their naira cards for international transactions without the need to frontload accounts with foreign currency.

He said the CBN would continue to adjust policies where necessary to improve the efficiency and functionality of the foreign exchange market.

Speaking on lending to small businesses, the CBN Governor admitted that the current high interest rate environment has affected access to credit for Small and Medium Enterprises (SMEs), but said efforts are ongoing to improve financing to the sector.

Cardoso disclosed that new credit extended to SMEs rose from about N153 billion in March 2026 to roughly N199 billion in April 2026.

He explained that retail lending accounted for about 94.73 per cent of the new credit facilities issued during the period, while general commerce accounted for about 2.46 per cent.

According to him, banks are increasingly becoming more willing to diversify their lending exposure away from only large-ticket transactions towards SMEs and retail businesses.

“The willingness to ensure that more credit is directed at the SME sector is certainly increasing,” he said.

Cardoso explained that financing SMEs is not the responsibility of the CBN alone, noting that collaboration with agencies such as the Federal Ministry of Industry, Trade and Investment, the Bank of Industry and fiscal authorities remains important.

He said the apex bank increasingly sees itself as a catalyst that uses policy tools and its convening power to encourage lending to smaller businesses.

The Governor also disclosed that the CBN recently signed a Memorandum of Understanding with the Nigerian Communications Commission aimed at reducing fraud and removing operational bottlenecks affecting SMEs and users of the financial system.

He added that the Global Standing Instruction framework introduced by the apex bank was helping lenders recover funds from defaulting debtors, thereby making financial institutions more confident in extending loans.

Cardoso further stated that the CBN had increased the single obligor limit for Development Finance Institutions to enable them provide more loans to SMEs.

He said the apex bank was also encouraging foreign development finance institutions to play a stronger role in supporting SME financing in Nigeria.

While admitting that more work still needs to be done, the Governor said progress is already being recorded in efforts to improve credit flow to the productive sectors of the economy.

On the banking sector recapitalisation programme, Cardoso disclosed that 33 banks have already met the new capital requirements introduced by the apex bank.

He noted that the programme had received commendation from the International Monetary Fund and described the process as relatively seamless.

According to him, the exercise reflects growing investor confidence in the Nigerian economy, with domestic investors accounting for about 74 per cent of participation while foreign investors contributed about 26 per cent. “I think Nigerians should be very proud of that,” he said.

Cardoso explained that banks yet to meet the required threshold are currently dealing with legal, regulatory and judicial challenges.

He added that some of the affected institutions lost valuable time following earlier regulatory interventions by the CBN, making direct comparisons with other banks unfair.

The Governor, however, assured Nigerians that the apex bank remains fully on top of the situation and that banking operations in the affected institutions continue normally.

He said the CBN would continue to support efforts by the affected banks to resolve their legal and regulatory issues and complete their recapitalisation process.

Cardoso also addressed growing concerns among bank customers over charges and transaction alerts, particularly the N50 stamp duty deductions received by many account holders.

The Governor clarified that the N50 stamp duty charge does not originate from banks but from tax authorities, while banks only serve as channels for remitting the deductions.

“This is something that emanates from the tax authorities,” he said.

He advised customers with complaints over charges to first engage their banks through the existing complaint resolution channels before escalating unresolved issues to the CBN’s Consumer Protection Department.

Cardoso disclosed that the apex bank has established a committee involving consumer experience executives from deposit money banks and leading microfinance banks to address customer complaints and improve banking experience.

According to him, the committee meets quarterly to review issues affecting customers and explore ways of improving service delivery across the banking industry.

The Governor also acknowledged that multiple transaction alerts sent by banks often create confusion for customers.

He said the CBN is reviewing ways to streamline and consolidate such alerts to make banking transactions clearer and easier for customers to understand.

Cardoso added that the apex bank’s compliance department is also monitoring market conduct and reviewing how banks handle customer complaints and compensation processes.