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To reduce dependence on imports and build local capacity, the CBN is also pushing backward integration across key sectors. Cardoso recently advised telecom companies to begin producing vital components like SIM cards, cables and towers locally. During a meeting in Abuja with Airtel Africa’s Group CEO Sunil Taldar, he explained that such efforts would reduce pressure on foreign exchange, create jobs, and stimulate the real sector. Taldar, in turn, lauded the CBN’s ongoing reforms and reaffirmed Airtel’s commitment to local production and expanding financial inclusion through digital technology. The telecom sector, long reliant on imported equipment, is now seen as ripe for transformation through domestic innovation and manufacturing.

The creative economy is also under the spotlight. Cardoso highlighted its capacity to attract up to $25 billion annually through exports of music, film, crafts, and digital content. He encouraged creatives to leverage digital platforms, global tours, and international collaborations to deepen Nigeria’s export footprint. Market confidence is also rebounding, as foreign portfolio investors (FPIs) return to Nigeria’s FX market, buoyed by improved transparency, stronger fundamentals, and effective CBN interventions. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), noted that despite global uncertainties, Nigeria is beginning to look like a more attractive destination for capital flight from riskier markets.

However, in Nigeria, there is historically a positive correlation between crude oil prices, GDP growth and stock market performance. “The outlook for the Nigerian stock market is therefore likely to be positive in the current context,” Yusuf said.

He said the surge in crude oil price would impact on Nigeria’s forex earnings, oil being the biggest forex earner for the country. “This development would also positively impact the country’s foreign reserves, ensure better forex liquidity and ultimately the stability of the naira exchange rate.

“The oil sector currently accounts for significant amount of government revenue. An improvement in crude oil price would therefore have a significant impact on government revenue. An improvement in revenue would positively impact fiscal consolidation and hopefully moderate the growth of the fiscal deficit.

“Investments in the oil and gas sector would post better returns if the conflict persists.  High oil price is good news for upstream oil and gas investors,” Yusuf said.

Oil revenue target

Also, the possibility of Federal Government achieving N19.5 trillion oil revenue target for the year rose with the soaring prices of crude oil over Middle East crisis. Analysts at Afrinvest West Africa, said that Federal Government’s projected oil revenue of N19.5 trillion will be on track. They highlighted that, based on previous macro commentary, the Federal Government needs to deploy a more prudent framework that prioritises sustainable budget growth.

There is also a high possibility that budget deficits for the year could reduce below N17 trillion, reducing total debt stock. To turn sustain revenue surge, the analysts recommended some measures the FG can take to sustain the improved macroeconomic environment. Firstly, with the increase in revenues and substantial reduction in PMS, Electricity and FX subsidies the FG should be deploying more resources towards critical infrastructure development while also tackling insecurity headlong to support improved productivity in the agrarian communities.

Secondly, the FG needs to prioritise optimising revenue potentials by strategically using the instrumentality of the state to end crude oil theft and boost aggregate output to the target 2.06mbpd level. Also, as recommended by the World Bank reducing the cost A of governance would be pivotal to Nigeria’s revitalisation drives, given the current disturbing level of debt profile.

Understanding telecoms Sector

According to the Nigerian Communications Commission (NCC), the total active telephony subscribers increased by 3.2 per cent month/month to 164.93 million in December 2024. The increase reflects the gradual recovery in the subscriber base following the conclusion of the NIN-SIM linkage program by mobile service providers in September. Analysing the market share by operators, MTN Nigeria led by 51.4 per cent with 84.61 million subscribers, Airtel Nigeria followed with 34.4 per cent (56.62 million subscribers), Globacom with 12.2 per cent (20.14 million subscribers) and 9mobile with 2.0 per cent (3.28 million subscribers). At the same time, the total number of internet subscribers rose by two per cent month/month to 139.28 million in December.

Looking ahead, analysts at Cordros Securities said they expect subscriber base recovery through SIM reactivation initiatives, especially from market leaders – MTN Nigeria and Airtel Nigeria. According to the National Bureau of Statistics (NBS) third quarter 2024 Gross Domestic Product (GDP) report, the information and communication sector, is made up of telecommunications and information services; publishing; motion picture, sound recording and music production; and broadcasting.

Views from stakeholders

The Executive Secretary of the Association of Licensed Telecommunication Operators of Nigeria (ALTON), Gbolahan Awonuga, said that aside telecom operators, other key business owners and entrepreneurs can also invest in the local manufacturing of key components in telecoms operations. He said: “We have to look inwards and get Nigerian companies to produce these key components in telecom operations locally. Government also has a role to play, by ensuring that key infrastructure especially power is available. We do not want a situation where locally produced inputs, will become more expensive than imported versions.”

Awonuga said that telecom sector plays key roles in banking services, including enabling digital payments and ensuring security of transactions. He said banking and telecom sectors have more to gain if backward integration thrives in the country adding that government has significant role to play to make the move a success. 

Research Head, Cowry Asset Management Limited, Charles Abuede, said the CBN governor’s call was to discourage the importation of foreign services into Nigeria, especially when efforts can be made to develop such services locally. “The high demand for foreign exchange by telecom operators has further pressured the naira due to increased demand for the dollar. However, with adequate infrastructure development and a conducive operating environment facilitated by regulators, these challenges can be mitigated,” he said. 

According to Abuede, “given Nigeria’s FX policies, illiquidity in the foreign exchange market, and infrastructure deficits, I think increased investment in the telecom sector would enable operators to embrace backward integration. This would allow them to manufacture key components, such as SIM cards, locally. As a result, production costs could decline—provided the operating environment remains stable. This will improve profit margins and enhance both top-line and bottom-line growth in the long run”.

The CBN under Cardoso has carried out several efforts to improve the functioning of the FX market. This has led to good results with average daily turnover in the Nigerian Autonomous Foreign Exchange Market increased by 226 per cent in the first half of last year when compared to the same period in 2023. Foreign portfolio inflows have increased by over 72% during this period, while foreign exchange reserves have risen from $32bn in May 2023 to over $40bn.

This represents the equivalent of eight months’ import cover and marks the highest reserve level in nearly three years. The market has also supported over $9bn in capital outflows over the past year as investors were able to freely repatriate capital and dividends without the need to wait for several months as experienced in the past. These results, Cardoso said, reflect improved confidence in the reforms he embarked on.

“In addition, we witnessed a $6 billion current account surplus in the first half of 2024 as a result of the impact of these reforms. Reduction in petroleum product imports supported by improved domestic refining capacity, a growing focus on non-oil exports and higher remittance inflows helped to support the positive current account balance,” he said.