The collaboration between the Central Bank of Nigeria (CBN), the political leaders, the private sector and civil society, to guarantee the stability of prices while minimizing the adverse effects on growth and livelihoods, is the key To promote a significant change for the general economic development of Nigeria, writes Joseph Inokotong.
A visible phenomenon in Nigeria's economic sky in recent years has been inflation. The rate to which the general level of prices of goods and services increased, reducing the purchasing power of money has left many in dilemma. Over time, things have become more expensive, and the same amount of money buys less.
Therefore, it is not surprising that the Central Bank of Nigeria (CBN) has decided to change the unorthodox forms, with the orthodox monetary policy line. The change has turned out to restore trust, strengthen the credibility of politics and stay focused on its central pricing stability mandate.
The road has not been easy, since managing disinflation amid persistent shocks requires not only solid policies, but also coordination between tax and monetary authorities to anchor expectations and maintain investor confidence. The CBN has always reiterated that it focuses on prices stability, the planned transition to an inflation orientation framework and strategies to restore purchasing power and relieve economic difficulties.
The important challenges presented in the last year, including persistent inflationary pressures, have partially attributed to global and national clashes. CBN's commitment to monetary price and stability despite these winds against it has produced measurable progress.
This has been manifested in relative stability in the currency market, reducing the disparities of the exchange rate and the increase in external reserves of more than $ 40 billion as of December 2024.
Recent data from the National Statistics Office (NBS) indicate that inflation pressures persist. As of December 2024, the inflation of the headlines stood at 34.80 percent, mainly driven by nucleus inflation, while food inflation showed signs of moderation.
According to the NBS, the food inflation rate in December 2024 was 39.84 percent per year, showing 5.91 percentage
higher points compared to 33.93 percent registered in December 2023. It attributed the increase in food inflation in a year to year to increase food prices such as the yam, the water ñam corn, rice, corn, etc.
Sin embargo, sobre un mes a mes, la tasa de inflación de alimentos en diciembre de 2024 fue del 2.66 por ciento, lo que muestra una disminución del 0.32 por ciento en comparación con el 2.98 por ciento registrado en noviembre de 2024. La disminución, The outstanding NBS can be attributed to the “” rate of decrease in the average prices of local beer (Burukutu), Pinto (tobacco class), fruit juice in tin, malt drinks, etc. (Class of soft drinks), rice, millet, cornmeal, etc. (Bread and cereal class) and cereal class) and cereal class) water ñe, Irish potatoes, coconut yam, etc. (potatoes, yam and other tubers) ”.
The average annual food inflation rate for the twelve months ending in December 2024 in the previous average of twelve months was 39.12 percent, which was 11.16 percent higher compared to the average annual exchange rate of 27.96 percent registered in December 2023.
In addition to this, national structural challenges, exchange rate transfer effects and energy prices settings continue to put pressure on prices and economic activity. At the same time, while structural factors play an important role in the inflationary challenge of Nigeria, monetary dynamics has also contributed to price pressures.
Experts say that liquidity injections associated with unorthodox monetary policies, particularly from the COVID-19 pandemic, have created a significant cantilever. They pointed out that, although these measures were destined to cushion immediate clashes, they did not translate into a consistent productivity growth, feeding inflationary pressures and greater currency volatility.
This, in part, led to the excess of Naira liquidity in the system, amplifying the inflation driven by the demand and exacerbated even more by the limitations of the supply side of the structural deficits.
These dynamics underline the importance of a disciplined and coordinated approach for monetary policy to restore stability, adopted by the CBN.
In response, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria initiated an adjustment cycle using orthodox approaches. Throughout 2024, the Bank implemented several bold policy measures in six MPC meetings, including the elevation of the monetary policy rate (MPR) through a cumulative 875 basic points to 27.50 percent, increasing the cash reserve ratio (CRR) of other deposit corporations (ODC) for 1750 base points to 50.00 percent, and adjust the asymmetric corridor around the MPR.
Many economic experts have estimated that without these interventions of decisive policies by the CBN, inflation could have reached 42.81 percent in December 2024.
Undoubtedly, inflation erodes purchasing power, discourages investment and exacerbates inequality; Therefore, the management of the disinflation process requires a careful balance of policies that mitigate short -term costs while anchoring long -term stability.
In line with this, the CBN said that it is totally committed to guaranteeing the stability of prices while minimizing the adverse effects on growth and living.
“As we move around 2025, I am optimistic that we have folded a corner and that the deflation is available. However, we must continue committed to bold and coordinated policy measures to consolidate our progress, ”said Olayemi Cardoso, governor of the Central Bank of Nigeria.
In an attempt to create an environment conducive to inclusive economic development, the CBN has gone beyond monetary policy and has made critical reforms to strengthen the financial system and guarantee macroeconomic stability.
This includes the introduction of unified multiple exchange rate windows to improve efficiency in the FX market. This reform has already yielded tangible results, with remittances through international money transfer operators (IMTOS) that increases 79.4 percent in the first three quarters of 2024 to $ 4.18 billion, compared to $ 2.33 billion in the same period of 2023.
In addition, the CBN has eliminated an accumulation of currency commitments for a total of $ 7.0 billion, restoring market confidence and improving FX liquidity. He lifted 41 articles previously prohibited by access to the official FX market, a measure introduced in 2015.
Similarly, the Apex bank introduced new minimum capital requirements for banks, in force in March 2026, to strengthen the resilience and global competitiveness of the Nigeria banking sector, positioning it to support the ambition of an economy of $ 1 billion. The Bank launched the Wi -Fi initiative under the national financial inclusion strategy, designed to close the gender gap in financial access, empower women through financial services, education and digital tools.
Recently, the CBN launched the Nigeria currency code, marking a decisive step for integrity, justice, transparency and efficiency in the FX market. The code, based on six basic principles, represents a binding commitment of the financial community to rebuild trust and inspire trust.
These reforms reflect the resolution of the CBN to create a favorable and inclusive environment for economic development. However, achieving macroeconomic stability requires sustained surveillance and a proactive monetary policy position.
In the global stage, advanced economies are making the transition towards monetary flexibility; The cautious optimism is emerging around potential improvements in capital flows for emerging markets. Therefore, Nigeria's ability to attract these entries will depend on the confidence of investors in national reforms, particularly those that guarantee macroeconomic stability and the delivery of real real investment yields.
It is encouraging that CBN reforms have marked the beginning of evidence -based results as exemplified by improving FX liquidity and promoting greater market stability. Naira gradually aligns with market foundations, creating a more predictable environment for national production, essential exports and imports. While the challenges remain, the CBN is confident that its policies are putting Nigeria on the road to sustainable economic stability.
Bringing this to fruit and shared prosperity requires collaboration as a key. Policy formulators, the private sector and civil society must work together to promote a significant change for the general economic development of the country.