The Governor of the Central Bank of Nigeria, Olayemi Cardoso has stressed the need for closer economic ties between Nigeria and the Middle East, focusing on collaboration in infrastructure, tourism, and the development of the financial sector.
This was disclosed in a statement issued by the bank on Monday.
During the inaugural Conference on Emerging Markets Economies in Saudi Arabia, Cardoso held discussions with Talal Al-Humond, the Assistant Governor for Monetary Affairs at the Saudi Central Bank, to explore potential avenues for cooperation between the two countries.
The statement read, “The Governor of the Central Bank of Nigeria, Mr. Olayemi Cardoso, has canvassed stronger economic ties with the Middle East and the Nigerian diaspora community in the region.”
According to the statement, Cardoso highlighted that Saudi Arabia’s focus on economic diversification, large-scale transformation, and investment in tourism offers a model for Nigeria to emulate in its quest for economic growth.
He also reaffirmed the Central Bank of Nigeria’s commitment to engaging with the Nigerian diaspora in the Middle East to enhance remittance flows and strengthen the country’s financial sector.
The statement also mentioned that Al-Humond expressed Saudi Arabia’s willingness to collaborate with Nigeria on mutually beneficial economic goals.
During a panel discussion at the conference moderated by the Director for the Middle East and Central Asia Department of the International Monetary Fund, Jihad Azour, Cardoso provided insights into Nigeria’s foreign exchange market reforms.
He pointed out that the gap between the official and parallel market exchange rates, which had been as wide as 60%, has now narrowed to around 4-5%. This improvement is attributed to policy consistency, increased market confidence, and greater transparency in forex trading, according to the statement.
He mentioned that the implementation of an electronic forex matching system, along with the introduction of a foreign exchange code of ethics signed by all Nigerian banks, has played a key role in restoring confidence in the market.
Thanks to these measures, Nigeria’s foreign reserves have now exceeded $40 billion, their highest in almost three years, according to the statement.
He recognized that Nigeria had encountered major economic challenges, such as capital flow reversals, multiple exchange rate systems, currency depreciation, high inflation, and a backlog of foreign exchange transactions, which led to diminished confidence in the naira.
When he assumed office, he said his team prioritized rebuilding market confidence by addressing the backlog of forex transactions and implementing reforms to stabilize the economy.
He explained that to address inflation and improve macroeconomic stability, the Central Bank had implemented a tight monetary policy, raising interest rates by 850 basis points over the past year.
He identified the removal of the fuel subsidy as a key reform, explaining that the policy, along with inefficiencies in the exchange rate system, had cost Nigeria an estimated 6% of its Gross Domestic Product each year.
He noted that while previous administrations lacked the political will to remove the subsidy, its elimination has greatly enhanced Nigeria’s fiscal outlook.
