Nigeria will benefit from Naira depreciation – CBN gov, Cardoso

The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has described the depreciation of the naira as an opportunity for the country to enhance its export trade.

Speaking at the Nigerian Economic Summit (NES) in Abuja on Wednesday, Cardoso explained that while the currency’s decline might appear challenging, it also creates room for investment and export growth.

“In terms of persuasion, what we need now is to ensure that investments are here. Take, for example, now it may seem like a threat in the sense that the exchange rate has come down so low,” Cardoso said.

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He noted that the weaker naira could boost Nigeria’s competitiveness in the global market, saying: “That also is an opportunity because what that means is that it can help to boost your exports. This will make Nigeria become a lot more competitive in the export trade. I just want to encourage people to say that the opportunities are here. Things are recalibrating in a particular direction. It’s not perfect, but definitely, there are opportunities for people to single out and invest.”

Cardoso further explained that exporting under current exchange conditions could benefit businesses: “By the time you are exporting out to other countries with the cost of import here and the relatively low naira, you will have a situation where you have to do things like that. And I see it happening. Others are doing it, and the interest is growing in leaps and bounds.”

The CBN governor echoed the views of Indermit Gill, Chief Economist of the World Bank Group, stressing that Nigeria must sustain ongoing reforms for at least a decade to achieve significant economic transformation.

He also noted the positive feedback from global financial institutions regarding the bank’s policies. “The issue of the World Bank Chief Economist. I wasn’t here, but I read the speech. To be honest, my interpretation wasn’t how others perceived it. I think he was basically misunderstood,” he said.

“My understanding of what he said is that the policies that the Central Bank is taking are putting Nigeria on the right track,” Cardoso added. He highlighted that international rating agencies and financial institutions share similar assessments of Nigeria’s progress, saying, “And they are all saying the same thing. And I doubt that they might all be wrong.”

In its latest Africa’s Pulse report, the World Bank highlighted the naira as one of the worst-performing currencies in sub-Saharan Africa, alongside the Ethiopian Birr and South Sudanese Pound. The report attributed the naira’s depreciation—about 43% as of August 2024—to persistent demand for dollars and limited dollar inflows.

Despite these challenges, Cardoso emphasized that staying the course with the current economic policies will yield long-term benefits.