Yemi Cardoso's Leadership Takes CBN to New Heights

A wise person once said that hard work leads to more work.

This saying was at the heart of Yemi Cardoso’s speech in London on June 10. He accepted the Central Banking award for Central Bank of the Year for the Central Bank of Nigeria (CBN).

At the event, known as the “Oscars of Banking,” Cardoso said, “We receive this recognition with humility. We see it, not as a destination, but as encouragement to continue the important work ahead.”

While there is indeed important work ahead, it is clear that the CBN under Cardoso has achieved impressive milestones since he took charge of a central bank that faced serious problems. These successes are especially notable during a time of “turbulence and uncertainty” and major global changes.

Cardoso mentioned that the credit for the achievements belongs to his hardworking team at the CBN, whom he represented when he accepted the award.

“I accept this award on behalf of the Board, Management and staff of the CBN. Above all, it belongs to the many dedicated professionals who serve our institution with integrity, expertise, and an unwavering commitment to the public good,” he stated.

He went on to reflect on the path to global recognition and the critical role the CBN plays in Nigeria’s financial system.

According to him, “the responsibility entrusted to central banks is a solemn one, to preserve confidence, safeguard stability and create the conditions in which economies and societies can prosper.”

The tough situation the CBN faced in 2023 and the decisive actions taken by Cardoso and his team to reverse years of financial mismanagement were detailed in an article about the CBN’s selection as Central Bank of the Year.

Quoting former Central Bank governor Sanusi Lamido Sanusi, Central Banking noted: “When Nigeria’s new president, Bola Ahmed Tinubu, assumed office in May 2023, he inherited an economy that was “on the brink of hyperinflation” and “fiscal bankruptcy” with “the naira in free fall” and “inflation rising month on month” due to “the total loss of CBN autonomy” and “very loose monetary policy under [Muhammadu] Buhari.” Sanusi added that “the nation looked more likely than not to be heading the way of Venezuela and Zimbabwe.”

In three years, with a strict focus on autonomy, good corporate governance, and clear monetary policy, Cardoso and his team have managed to pull the economy back from the edge where it was struggling with high inflation, low foreign reserves, unclear monetary reporting, a large backlog of matured FX obligations, and a big gap between official and parallel market rates.

The CBN, under Cardoso’s leadership and a clear inflation targeting method, has overseen a reduction in inflation to about 15 percent. Foreign reserves have increased to over $50 billion, covering more than 10 months of imports. The FX spread has decreased to about 2 percent from 60 percent, creating a healthier economic environment.

The CBN has also worked closely with fiscal authorities, strengthened the banking sector, and restored investor confidence, which helped Nigeria exit the “grey list.”

These achievements were key to the recognition from Central Banking. Christopher Jeffrey, the editor-in-chief, stated that the CBN was recognized for “its monetary policy reforms that overturned past frameworks and resulted in widespread improvements in the country’s economy.”

He added that the reforms allowed the CBN to “implement disciplined monetary tightening, while also pursuing FX market reform. A further major achievement has been the CBN’s clearance of more than $7 billion of outstanding obligations.”

Central Banking also mentioned that as “evidence of its widespread efforts to improve its operation, the central bank had carried out governance and transparency improvements... Additionally, banking sector recapitalisation, payments modernisation and Nigeria’s removal from the Financial Action Task Force “grey list” had contributed to rebuilding investor and public confidence, making the CBN a fitting candidate to be recognized for global excellence.”

Recognition has also come from other parts, especially the International Monetary Fund (IMF). They praised the CBN’s reforms, saying that its “Directors welcome steps by the authorities to build reserves and support market confidence and praised reforms to the foreign exchange market that supported price discovery and liquidity.”

Last year, Cardoso was named African Central Banker of the Year at the Annual Banker Awards for his ongoing reforms. The organizers acknowledged “Governor Cardoso’s recent achievements and the Central Bank’s critical role in addressing market imbalances and repositioning the Nigerian economy for sustainable growth.”

Closer to home, the Centre for Economic Growth and Monetary Reforms (CEGMR) has praised the CBN for its management of the country’s monetary policy. The director stated, “Monetary policy is not magic, but discipline pays off. The CBN’s commitment to consistency and orthodox tools is now reflected in falling inflation, stabilizing exchange rates, and a rebound in external reserves.”

While the achievements are clear, two key things stand out in the Central Banking article. First is the strong vote of confidence from Sanusi Lamido Sanusi, known for being tough.

The second is Cardoso’s insistence that more work lies ahead. After completing the banking recapitalization process, Cardoso seems determined to ensure that the gains are maintained. On the day of the award ceremony in London, the CBN released new rules for licensing and regulating financial holding companies (FHCs/HoldCos) in Nigeria.

The June 10 circular, with reference number FPR/DIR/PUB/CIR/001/017 and signed by Dr. Rita Sike, director of the Financial Policy and Regulation Department, was titled, “Exposure Draft of The Revised Guidelines for Licensing and Regulating Financial Holding Companies In Nigeria.” The document presented key proposals on Ring-Fencing Operations, Capital Requirements, Governance Structure, and Public Engagement aimed at “enhancing the stability of the banking sector and protecting depositors’ funds.” Holdcos are now “required to maintain a minimum 51% equity stake in each subsidiary and have stricter capital requirements to ensure financial stability.”

The CBN is also ensuring the implementation and monitoring of its FX manual to promote transparency, increase market participation, and improve documentation standards and EFEM surveillance.

The reward for Yemi Cardoso and his team’s hard work is certainly more work, and they are clearly committed to achieving it.