The Central Bank of Nigeria (CBN) says Nigeria’s net usable external reserves have risen from just $859 million in the second quarter of 2023 to about $40 billion, following a series of reforms implemented under Governor Olayemi Cardoso.
The figure was disclosed by the CBN Deputy Governor in charge of Corporate Services, Dr Muhammad Abdullahi, during the opening of the 38th Seminar of Finance Correspondents and Business Editors in Abuja.
Abdullahi said the $859 million recorded in 2023 represented the net position after identified short-term obligations had been taken into account. He described the situation inherited by the current administration as one of several challenges that required extensive reforms across the financial system.
According to him, Nigeria’s foreign exchange market was highly fragmented in 2023, with multiple official windows operating alongside a large parallel market. The arrangement, he said, created uncertainty for businesses over the applicable exchange rate and access to foreign currency.
He noted that the difference between official and parallel-market rates averaged more than 60 percent in 2022 and exceeded 100 percent at certain points.
The pressure was further compounded by outstanding foreign exchange forward claims, which Abdullahi said had exceeded $7 billion. He added that declining capital inflows and uncertainty surrounding access to foreign exchange made it difficult for businesses to price goods, plan investments and meet financial obligations.
The deputy governor said the problems were interconnected, with administrative allocation of foreign exchange weakening price signals, excess liquidity increasing pressure on the currency market and uncertainty encouraging more transactions outside the formal system.
He said the circumstances informed the CBN’s subsequent reforms, beginning with changes to the foreign exchange market in June 2023.
The apex bank consolidated the existing foreign exchange windows and moved towards a willing-buyer, willing-seller framework. It also removed restrictions that had prevented 43 categories of imports from accessing the official market and reviewed outstanding forward claims.
Abdullahi said valid claims were subsequently settled, helping to address what he described as a major source of uncertainty for businesses and investors.
The CBN official said the reforms also required stronger control of liquidity and a more resilient banking sector capable of operating during the adjustment.
Separately, the Director of Banking Supervision, Dr Olubukola Akinwunmi, said the apex bank had strengthened its oversight of financial institutions to protect banking-system stability.
Akinwunmi disclosed that banks are now being prevented from investing more than 10 percent of their shareholders’ funds in offshore subsidiaries.
He explained that the restriction was not introduced by the current CBN administration but had previously existed without being enforced with sufficient diligence. The renewed enforcement, he said, forms part of efforts to strengthen supervision and prevent developments that could threaten the stability of the banking system.
