Financial reforms gain traction with global recognition

The Central Bank of Nigeria secured a major global endorsement last week after it was named Central Bank of the Year 2026 by the Central Banking Awards Committee in London, a recognition that underscores the institution’s role in steering Africa’s largest economy through a difficult period of instability toward gradual recovery.

Announced at the 13th annual Central Banking Awards, the honour has drawn international attention to Nigeria’s ongoing financial sector reforms and the central bank’s efforts to stabilise the macroeconomic environment. It also reflects a broader narrative of economic adjustment, highlighting both the severe pre-reform challenges and the progress recorded in exchange rate stability, foreign investment inflows, and domestic economic resilience.

Under the leadership of its Governor, Olayemi Cardoso, the apex bank has gained global recognition for implementing far-reaching reforms that have helped redirect the Nigerian economy toward a path of stability and growth. The awards committee noted that the country faced an acute economic crisis before the current reform programme began, requiring bold and coordinated policy responses.

According to the committee, Nigeria’s economic conditions prior to the reforms were deeply strained. When President Bola Tinubu assumed office in May 2023, he inherited an economy that was nearing what observers described as “hyperinflation” and “fiscal bankruptcy.” The naira had been depreciating rapidly, while inflationary pressures continued to intensify, eroding purchasing power and undermining confidence.

In response, the administration introduced a series of sweeping reforms aimed at addressing structural imbalances. Among the most consequential were the removal of fuel subsidies and the liberalisation of the foreign exchange market. While these measures were widely seen as necessary, their immediate effects were difficult for many Nigerians, as they triggered a sharp rise in prices and pushed inflation to 34.80 per cent by December 2024—the highest level recorded in nearly three decades.

Despite the initial hardship, the Central Banking Awards Committee observed that the Central Bank of Nigeria, under Cardoso’s leadership, embarked on a reform agenda designed to restore stability, rebuild trust, and reinforce the financial system. The strategy centred on disciplined monetary policy, institutional restructuring, and enhanced transparency in policy implementation.

A key aspect of the reforms involved discontinuing quasi-fiscal interventions, where the central bank had previously extended direct credit to various sectors of the economy. This practice had contributed to excess liquidity and rising inflation. By ending such interventions, the apex bank signalled a return to orthodox monetary policy, aimed at restoring credibility and controlling price pressures.

Internally, the institution also undertook significant restructuring. Staff numbers were reduced, cases of misconduct were addressed, and personnel were redeployed to areas considered critical for achieving the bank’s objectives. These changes were part of a broader effort to strengthen governance and improve operational efficiency.

A senior official of the bank explained that transparency and accountability have become central pillars of its operations. The CBN has improved the way it communicates policy decisions, strengthened internal oversight, and adopted more robust analytical tools to guide decision-making. These measures have helped build confidence among stakeholders, including investors and market participants.

One of the most significant areas of reform has been the foreign exchange market. The central bank replaced the multiple exchange rate system with a willing-buyer, willing-seller framework, allowing market forces to play a greater role in determining the value of the naira. In addition, it introduced an electronic foreign exchange matching system to improve transparency and efficiency in transactions.

Cardoso stated that these changes have led to a substantial reduction in the disparity between official and parallel market exchange rates, bridging the gap to less than two per cent from over 60 per cent previously. He also noted that the bank has cleared a backlog of foreign exchange obligations, a move that has helped restore confidence among investors and businesses operating in the country.

Nigeria’s external reserves have also strengthened, reaching approximately $46.7bn by November 2025—the highest level recorded in nearly seven years. This improvement has provided a buffer against external shocks and enhanced the country’s ability to meet its international obligations. The International Monetary Fund commended these efforts, noting that reforms in the foreign exchange market have improved liquidity and facilitated more effective price discovery.

Beyond the FX market, the central bank has worked to deepen financial markets by collaborating with the Securities and Exchange Commission and the National Pension Commission. Together, they have introduced measures to enhance transparency in the fixed-income market and promote long-term investment, which is critical for sustainable economic growth.