The Monetary Policy Committee lowers the benchmark rate from 26.5% amid a continued decline in Nigeria’s inflation rate.

The Central Bank of Nigeria (CBN) has cut its benchmark interest rate to 23 per cent from 26.5 per cent as the country’s inflation rate continues to ease.

CBN Governor Olayemi Cardoso announced the decision on Tuesday in Abuja following the conclusion of the Monetary Policy Committee’s 307th meeting.

The rate cut represents a significant reduction in the Monetary Policy Rate (MPR), which serves as the benchmark for interest rates across Nigeria’s financial system.

Cardoso announced the decision at the end of the MPC meeting, saying the committee had agreed to reset the monetary policy rate to 23 per cent.

“The Committee decided as follows: reset the monetary policy rate to 23 per cent,” Cardoso said.

The decision comes after the MPC maintained the benchmark rate at its two previous meetings.

The latest move also follows a 50-basis-point rate cut announced by the committee in February 2026.

MPC Responds as Inflation Continues to Ease

The latest interest rate reduction comes against the backdrop of declining inflation in Nigeria.

According to the most recent Consumer Price Index report released by the National Bureau of Statistics, headline inflation eased marginally to 15.39 per cent in August 2026 from 15.43 per cent in July.

The August figure represented another decline in the country’s inflation rate.

Our source noted that the latest inflation reading marked the third consecutive decline after inflation had recorded three consecutive monthly increases.

The continued moderation in inflation provided the backdrop for the MPC’s decision to reduce the benchmark interest rate.

However, the source material did not provide further details on the committee’s assessment of inflation expectations, exchange-rate developments, economic growth or other factors that influenced Tuesday’s decision.

Benchmark Rate Falls From 26.5%

The reduction takes the MPR from 26.5 per cent to 23 per cent.

The MPR is one of the CBN’s key monetary policy instruments and influences the broader cost of borrowing within the economy.

A reduction can affect lending conditions across commercial banks and other financial institutions, although the eventual impact on individual borrowers depends on several factors, including banks’ pricing decisions and prevailing economic conditions.

The latest adjustment therefore represents a notable shift in the monetary policy rate after the CBN kept the benchmark unchanged at its two most recent MPC meetings.

The committee’s decision will be closely watched by businesses, investors, lenders and consumers as they assess what the lower benchmark rate could mean for borrowing and economic activity.

Decision Follows Earlier 2026 Rate Cut

The latest rate reduction is not the first adjustment made by the MPC this year.

The committee announced a 50-basis-point cut in February 2026.

It subsequently maintained the benchmark rate at its next two MPC briefings before announcing Tuesday’s larger reduction.

The sequence indicates that the committee had previously opted to maintain the existing rate before deciding to make a substantial adjustment at its 307th meeting.

The latest decision also comes as inflation moves further away from the levels recorded earlier in the year.

The MPC’s decision will therefore be important for businesses and financial institutions monitoring the direction of monetary policy during the remainder of 2026.

Inflation Remains Key Economic Indicator

Inflation has remained an important consideration for Nigeria’s monetary authorities as they seek to balance price stability with economic growth.

The August headline inflation rate of 15.39 per cent represents a marginal decline from July’s 15.43 per cent.

Although the month-on-month reduction was relatively small, the continued decline represents the third consecutive decrease recorded after the earlier period of rising inflation.

The trend provides an important economic backdrop to Tuesday’s interest-rate decision.

The CBN has the responsibility of using monetary policy tools to pursue price stability and support broader economic objectives within its statutory mandate.

The MPR is one of the instruments available to the bank as it responds to changing economic conditions.

What the Rate Cut Could Mean

The immediate implications of the rate cut for consumers and businesses will depend on how financial institutions respond to the lower benchmark.

A reduction in the MPR can influence the broader interest-rate environment and may affect the cost at which banks obtain and lend funds.

Businesses that rely on credit will therefore be watching the response of commercial banks and other lenders.

Consumers with borrowing needs may also monitor lending rates following the CBN’s announcement.

However, a lower MPR does not automatically translate into an equivalent reduction in the interest rates charged to every borrower.

Banks consider several factors when pricing loans, including risk, funding costs, operating expenses and the individual borrower’s financial profile.

The actual effect of Tuesday’s decision will consequently become clearer as financial institutions respond to the new benchmark.

CBN Governor Announces Committee Decision

Cardoso announced the committee’s decision after the conclusion of its 307th meeting in Abuja.

The governor stated the committee’s decision directly, confirming that the benchmark rate had been reset to 23 per cent.

The announcement brings a major change to Nigeria’s monetary policy framework after the benchmark had remained at 26.5 per cent.

The CBN’s decision is now expected to generate attention across financial markets as investors and economic analysts assess the implications for borrowing costs, investment and economic activity.

Further details from the MPC’s meeting will provide additional context on the committee’s assessment of the Nigerian economy and the factors behind the decision.

At the time of the report, the CBN governor’s announcement confirmed the new benchmark rate, while further details were expected to follow.

Inflation Trend Sets the Immediate Context

The latest inflation data provide the clearest economic context contained in the source for the rate cut.

Headline inflation declined from 15.43 per cent in July to 15.39 per cent in August.

While the decline was marginal, it extended a three-month downward trend following the earlier period of consecutive monthly increases.

The combination of easing inflation and the decision to reduce the MPR will now be closely monitored by businesses, investors and financial institutions.

The rate adjustment also marks a significant change from the CBN’s recent decision to keep the benchmark unchanged.

For Nigeria’s economy, the key question will be how the new 23 per cent benchmark affects lending conditions and economic activity while the CBN continues to monitor inflation and other macroeconomic indicators.

For now, the MPC has formally lowered the benchmark interest rate from 26.5 per cent to 23 per cent.

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The International Monetary Fund (IMF) has urged Nigeria and other major African economies to strengthen fiscal, monetary and governance reforms as part of efforts to improve economic stability and promote broader-based growth.

In its assessment of reform priorities across eight of the African Union’s largest economies, the IMF identified fiscal reform as a key priority in all but one of the countries reviewed. For Nigeria, the areas highlighted include tax policy, revenue collection, public financial management and more efficient government spending.

The Fund also identified improvements to monetary policy frameworks and policy transmission as priorities for Nigeria, Egypt and Ethiopia. In Nigeria’s case, it said governance reforms should include stronger fiscal transparency, better public financial management and improved anti-corruption measures.

The IMF said stronger domestic revenue mobilisation and more transparent and efficient public spending would help African economies build more resilient institutions. It argued that stronger fiscal and monetary frameworks can support sustainable and inclusive economic growth.

Nigeria’s tax reform agenda

The recommendations come as the Federal Government continues to implement a wide-ranging reform of Nigeria’s tax system. The new framework, which took effect in January 2026, is built around the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service (Establishment) Act and Joint Revenue Board (Establishment) Act.

The reforms are intended to simplify tax administration, remove overlapping taxes, improve compliance and broaden government revenue. They are also designed to reduce the regulatory and tax burden on smaller businesses.

However, businesses continue to cite taxation as a major operating challenge. The Central Bank of Nigeria’s July 2026 Business Expectations Survey found that 70.8 per cent of respondents identified high and multiple taxation as their biggest constraint, ahead of insecurity and high interest rates.

For the housing and construction sectors, the quality of fiscal policy has direct implications. Developers, contractors and property businesses operate within a wider environment shaped by taxation, public infrastructure spending, interest rates and access to finance. Changes that improve tax administration while reducing unnecessary duplication could affect project costs and investment decisions.

Monetary policy remains a concern

The IMF’s call for stronger monetary policy frameworks follows an aggressive tightening cycle by the Central Bank of Nigeria (CBN) in recent years.

After Olayemi Cardoso became CBN governor in 2023, the bank pursued tighter monetary and liquidity conditions alongside foreign exchange reforms. The measures were aimed at addressing inflationary pressures, strengthening market confidence and improving macroeconomic stability.

The Monetary Policy Rate stood at 18.75 per cent in 2023 before the CBN began raising it in 2024. The benchmark rate increased to 22.75 per cent in February 2024 and eventually reached 27.5 per cent by the end of that year.

The CBN also increased banks’ Cash Reserve Ratio from 32.5 per cent to 45 per cent in early 2024 and later to 50 per cent as part of efforts to reduce excess liquidity.

The policy environment has since moved towards gradual easing as inflationary pressures moderated and economic conditions improved. Presidential aide Tope Fasua has nevertheless argued that the country should reconsider its tight monetary stance, warning that persistently high interest rates could restrict economic expansion without delivering the desired reduction in inflation.

Financing risks and infrastructure

The IMF’s concerns also extend to Nigeria’s approach to sovereign financing. In June, the Fund cautioned the country over plans to raise as much as $5 billion through a derivatives-based financing arrangement with First Abu Dhabi Bank.

The IMF warned that such structures can expose governments to significant risks because their terms may be difficult to evaluate fully.

The Federal Government has also secured about $1.2 billion in financing from the United Arab Emirates for construction of a major section of the Lagos–Calabar Coastal Highway.

Infrastructure financing remains important to Nigeria’s wider development prospects because transport networks and public investment influence access to housing, construction activity, land values and the expansion of urban centres.

For Nigeria, the IMF’s recommendations therefore extend beyond macroeconomic indicators. Stronger public finances, effective monetary policy, transparent governance and disciplined infrastructure financing can shape the operating environment for businesses and determine how effectively public resources support economic and urban development.

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How Infrastructure Deficit Stalls Growth in Real Estate can often be worsened by wider monetary policy confusion, prompting the Central Bank of Nigeria (CBN) on Wednesday, July 8, 2026, to issue a stern directive verifying that both the standard and commemorative centenary ₦100 banknotes remain valid legal tender. In a circular released from its Abuja headquarters, the apex bank addressed spreading market anxieties following widespread reports of retailers, landlords, and informal traders unlawfully rejecting the older, standard paper bills. The economic regulator clarified that the centenary commemorative note was designed to circulate concurrently alongside—rather than serve as a replacement for—the original denomination.

Financial authorities strongly cautioned commercial institutions, property managers, and retail businesses that refusing to accept legally issued national currency constitutes a direct violation of Section 20(5) of the CBN Act. Regulatory executives emphasized that such arbitrary actions distort everyday downstream transactions, lower consumer purchasing power, and cause unnecessary frictions within commercial real estate, logistics, and commodity markets. To maintain transaction stability and protect macro-economic confidence, the monetary authority announced that it has deployed nationwide compliance monitoring teams to identify and penalize defaulting organizations.

Moving forward, the apex bank urged members of the public to confidently carry out their daily financial transactions using either version of the ₦100 currency denomination. Officials reiterated that the bank remains fully committed to maintaining the integrity of the naira while ensuring an uninterrupted flow of physical liquidity across all local supply chains. Members of the public encountering resistance at retail outlets or corporate real estate desks have been directed to report non-compliant entities directly through official financial regulatory enforcement channels to prevent localized trade disruptions.

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The Central Bank of Nigeria (CBN) has revoked the operating licences of 46 microfinance banks across the country over their failure to meet key regulatory requirements for continued operation.

The apex bank announced the decision in a statement issued by its Acting Director of Corporate Communications, Sidi-Ali Hakama, stating that the revocation took effect from July 1, 2026.

According to the CBN, the action was approved by Governor Olayemi Cardoso in accordance with Sections 12 and 13 of the Banks and Other Financial Institutions Act (BOFIA), 2020.

The regulator explained that the affected institutions failed to satisfy critical conditions required of licensed financial institutions, prompting the withdrawal of their licences.

The CBN said the affected banks were found to have committed one or more regulatory infractions, including inadequate assets to meet liabilities, prolonged inactivity, closure of operations without regulatory approval, failure to commence business within 12 months of licence issuance, and inability to maintain the minimum capital requirement prescribed by law.

“The revocation of the licences is part of the Bank’s ongoing efforts to safeguard the stability of the financial sector, protect depositors and ensure that licensed institutions comply with current laws and regulatory requirements,” the statement said.

The apex bank reiterated its commitment to maintaining a safe, sound and resilient financial system through strict supervision and enforcement of regulatory standards.

“The Central Bank of Nigeria remains committed to promoting a safe, sound and resilient financial system and will continue to take appropriate supervisory and regulatory actions where necessary to maintain public confidence in the Nigerian financial system,” it added.

Among the affected institutions are Minji-Se Churchill Microfinance Bank (Rivers State), Merchant Microfinance Bank (Abia State), Gold Microfinance Bank (Lagos State), Crystabel Microfinance Bank (Bayelsa State), Creditville Microfinance Bank (Lagos State), OurPass Microfinance Bank (Ondo State), Entrepreneur Microfinance Bank (Lagos State) and Avantus Microfinance Bank (Osun State).

A significant number of the affected institutions are based in Kano State, including Zain Microfinance Bank, Bompai Microfinance Bank, Ajwa Microfinance Bank, NOW NOW Digital Microfinance Bank, Minjibir Microfinance Bank, Shanono Microfinance Bank, Sumaila Microfinance Bank, Rimin Gado Microfinance Bank, Sycamore Microfinance Bank, Tofa Microfinance Bank, Kanopoly Microfinance Bank, Bellbank Microfinance Bank and Esteem Microfinance Bank.

Industry analysts say the move reflects the CBN’s determination to strengthen regulatory compliance, improve financial sector stability and eliminate weak institutions that pose risks to depositors and the broader banking ecosystem.

The development marks one of the largest single licence revocations in the microfinance banking sector in recent years as the regulator intensifies efforts to sanitise Nigeria’s financial services industry.

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The Central Bank of Nigeria’s (CBN) monetary policy decisions continue to shape financial market conditions, as the apex bank maintains a tight stance aimed at stabilising the naira while inadvertently slowing credit expansion and business growth.

Although exchange rate stability remains a key priority, analysts say the prolonged high-interest-rate environment is creating significant pressure on corporate lending and economic activity.

CBN Holds Rates at 26.5% Amid Inflation Concerns

Following its Monetary Policy Committee (MPC) meeting, the CBN maintained the Monetary Policy Rate (MPR) at 26.50 percent, signalling a pause in its aggressive rate-hiking cycle.

Investment analysts at Meristem Securities Limited warn that this decision reinforces a “higher-for-longer” interest rate environment, which will continue to restrict access to credit across sectors of the economy.

Credit Conditions Remain Tight for Businesses and Households

According to analysts, the elevated interest rate level is making borrowing increasingly expensive for both businesses and individuals.

Many firms are now delaying expansion plans, capital projects, and operational investments due to high financing costs.

Households are also reducing borrowing, especially for discretionary spending, as loan repayments become less affordable.

Meristem analysts noted that:

“High cost of borrowing is expected to keep credit creation relatively weak as both lenders and borrowers remain cautious amid still-tight financial conditions.”

Banks Shift Focus to Treasury Income

While the tight monetary environment is slowing lending, it is benefiting commercial banks in other ways.

Banks are expected to record stronger earnings from:

• Government securities
• Treasury bills
• Repriced interest-bearing assets

However, analysts say credit growth will remain weak as risk-averse lending behaviour continues across the financial system.

This means bank profitability is likely to rely more on fixed-income investments than traditional loan expansion.

CBN Defends Tight Monetary Policy

CBN Governor Olayemi Cardoso defended the decision to maintain a restrictive monetary stance, saying exchange rate stability remains essential to controlling inflation.

He noted that recent inflation increases were driven largely by external shocks and described them as temporary.

According to him:

“The centrepiece of our toolkit is ensuring that our foreign exchange rate remains stable.”

Liquidity Flows Into Government Securities

With limited credit expansion in the real economy, excess liquidity is increasingly moving into safer government instruments such as Treasury bills and bonds.

Analysts expect continued strong demand at bond auctions, even as yields remain elevated due to inflationary pressures and government borrowing needs.

Outlook for Investors

Market analysts advise investors to adopt a cautious and selective strategy in the current environment.

They recommend focusing on:

• Strong, defensive stocks
• Companies with stable earnings
• Firms with reliable dividend payouts

In fixed-income markets, continued demand for government securities is expected to support liquidity flow.

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Nigeria’s sweeping economic reforms have earned strong commendation from the International Monetary Fund (IMF), with the global lender pointing to growing stability and signs of durable recovery in its latest Article IV Consultation report.

The IMF noted that recent policy reforms have helped restore macroeconomic stability, describing them as bold and necessary steps toward rebuilding investor confidence and strengthening the country’s financial system.

A key highlight of the reforms is the renewed independence of the Central Bank of Nigeria (CBN), which has significantly reduced its reliance on the controversial “Ways and Means” financing. According to the IMF, these advances have been cut by nearly 90 percent, marking a decisive end to deficit monetisation and reinforcing the foundation for inflation control.

The impact is already visible. Nigeria’s headline inflation, which previously surged above 40 percent, has dropped to 22.9 percent as of May 2025, reflecting the effectiveness of the CBN’s tight monetary policy stance.

The IMF also praised the country’s foreign exchange (FX) reforms, particularly the transition to a unified exchange rate system under a willing-buyer, willing-seller framework. This has improved liquidity, transparency, and price discovery in the FX market.

As a result, Nigeria recorded stronger foreign reserve growth, with reserves rising to $40.9 billion by the end of 2024, while FX inflows reached $6.9 billion in Q1 2025. The gap between official and parallel market rates has also narrowed significantly, falling from over 60 percent to below 3 percent, signalling improved market confidence.

In a further boost, Nigeria returned to the Eurobond market in January 2025 for the first time in four years, reflecting renewed investor confidence and increased portfolio inflows.

The IMF equally acknowledged ongoing reforms in the banking sector, including plans to increase banks’ minimum capital requirements by March 2026. The initiative is expected to strengthen financial institutions, improve credit access, and support long-term economic growth.

Efforts to expand financial inclusion, particularly through digital banking platforms and initiatives like the Women’s Financial Inclusion (Wi-Fi) programme, were also commended as part of broader structural reforms.

Despite the positive outlook, the IMF cautioned that challenges remain, including inflation pressures, infrastructure deficits, insecurity, and fiscal risks. It stressed the need for continued reforms in agriculture, energy supply, healthcare, and education to sustain growth.

“Recent reforms should help establish a strong foundation for sustained and inclusive growth,” the IMF noted, while calling for policy consistency and coordination in navigating global economic uncertainties.

Reacting to the report, CBN Governor Olayemi Cardoso said the assessment reinforces Nigeria’s progress toward restoring credibility and achieving long-term economic stability.

“This affirms that Nigeria is regaining credibility and laying the foundation for inclusive growth. It is also a reminder that discipline and vision remain essential,” Cardoso said.

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Domestic investors have contributed about 72 percent of the funds raised by Nigerian banks under the ongoing recapitalisation programme, according to the Central Bank of Nigeria (CBN).

The apex bank disclosed that financial institutions have continued to approach the capital market through various fundraising channels as they work to meet the March 31, 2026 deadline for the recapitalisation exercise.

As of February 2026, banks had raised a total of N4.05 trillion in verified and approved capital.

Domestic participation dominates fundraising

The Governor of the Central Bank of Nigeria, Olayemi Cardoso, said N2.90 trillion of the total funds raised came from domestic investors, while N1.15 trillion—representing about 28 percent—was sourced from foreign participation.

According to him, the figures demonstrate strong local investor participation in the capital strengthening exercise across the banking sector.

“In summary, 71.67 percent is domestic mobilisation and 28.33 percent is foreign participation. This balance represents a mix of domestic and foreign investment, signalling broad investor engagement and confidence in the sector,” Cardoso said.

Thirty banks meet capital requirements

The CBN also disclosed that many banks have already complied with the new minimum capital requirements as the deadline approaches.

In a statement issued by Hakama Sidi-Ali, the Acting Director of Corporate Communications at the CBN, the regulator said 30 banks had already met the new capital thresholds applicable to their licence categories.

According to the statement, 33 banks in total have raised additional capital through rights issues, initial public offerings and private placements as part of the recapitalisation programme.

“As of March 6, 2026, the recapitalisation exercise is progressing steadily. Thirty banks have met the new minimum capital requirements applicable to their respective licence authorisations,” the statement said.

The central bank added that the capital positions of the remaining banks are currently undergoing routine verification before final confirmation of compliance within the stipulated timeline.

Capital market activity rises

Industry observers say the recapitalisation drive has increased activity in Nigeria’s capital market since the programme was introduced.

Several banks have returned to the market to raise funds from existing shareholders and new investors through rights issues, public offers and private placements.

Market analysts believe that institutional investors such as pension funds, asset managers and other investment vehicles have played a key role in the strong domestic participation recorded so far.

Purpose of the recapitalisation programme

The CBN introduced the recapitalisation programme in 2024 to strengthen the resilience of Nigeria’s banking sector.

The policy requires banks to raise fresh capital to meet revised minimum thresholds based on their operating licence categories.

According to the regulator, the capital increase is designed to help banks absorb economic shocks more effectively and expand their ability to finance businesses and households.

Experts say stronger capital buffers will also improve financial system stability and increase banks’ capacity to support key sectors of the economy.

The programme represents one of the most significant capital strengthening exercises in Nigeria’s banking industry since the 2005 banking consolidation, which reduced the number of banks through mergers and acquisitions.

CBN maintains oversight

The central bank said the recapitalisation process is being closely monitored to ensure transparency, regulatory compliance and protection for depositors and investors.

“The Nigerian banking system remains stable and sound. The recapitalisation programme remains firmly on track and will further strengthen the capacity of the banking sector to support households, businesses and sustainable economic growth,” the CBN said.

The regulator added that it will continue to maintain supervisory engagement with financial institutions throughout the recapitalisation period to ensure full compliance with prudential standards.

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Thirteen Nigerian banks are facing mounting pressure as the March 31, 2026 recapitalisation deadline set by the Central Bank of Nigeria (CBN) draws closer, with only weeks left to meet the new minimum capital requirements.

CBN Governor Olayemi Cardoso announced that 20 out of the 33 participating banks have successfully met the revised capital threshold under the apex bank’s sweeping banking sector reform. According to him, the institutions have collectively raised a verified and approved total of ₦4.05 trillion as of February 19, 2026.

Cardoso disclosed the update at the conclusion of the Monetary Policy Committee (MPC) meeting in Abuja, noting that the committee welcomed the significant progress recorded so far. He added that most financial soundness indicators across the banking sector remain within regulatory benchmarks, reflecting resilience despite prevailing economic challenges.

Breakdown of the funds raised shows that ₦2.90 trillion, representing 71.67 percent, came from domestic investors, while foreign participation accounted for $706.84 million, equivalent to about ₦1.15 trillion, or 28.33 percent of the total. The CBN governor described the mix of local and foreign capital inflows as a strong vote of confidence in Nigeria’s financial system.

However, 13 banks are yet to complete their recapitalisation processes. Industry sources indicate that some of the affected lenders are exploring strategic options, including mergers, acquisitions, and other forms of consolidation, to meet the regulatory requirement before the non-negotiable deadline.

Cardoso explained that certain banks currently under regulatory intervention face legal and structural constraints, which may affect the timing and sequencing of their capital-raising efforts. He noted that it would be unrealistic to expect such institutions to follow the same timeline as banks that had over two years to prepare.

Despite the uncertainty surrounding the remaining lenders, the CBN reassured the public that depositors’ funds remain safe. The apex bank emphasised that all affected institutions continue to operate under strict supervisory and regulatory oversight to safeguard financial stability.

The March 31 recapitalisation deadline forms part of broader reforms aimed at strengthening Nigeria’s banking sector, enhancing shock absorption capacity, and positioning lenders to support long-term economic growth.

With just weeks to go, attention now shifts to the 13 banks yet to meet the capital requirement and whether last-minute deals or investor injections will help them cross the regulatory threshold in time.

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Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has raised concerns over mounting global debt pressures, warning that nearly half of low-income countries are either in debt distress or at high risk.

Edun spoke at the ongoing Technical Group Meeting of the Group of 24 (G-24) in Abuja, where he highlighted the growing strain debt servicing is placing on developing economies.

Nigeria’s Debt Profile Under Scrutiny

Although Nigeria is classified by the World Bank as a lower-middle-income country for 2024–2026, its public debt has continued to rise, reaching an estimated $100 billion, with a debt service-to-revenue ratio of about 47 percent in 2025.

Edun noted that total annual debt servicing payments across the Global South now exceed inflows from Overseas Development Assistance (ODA) and Foreign Direct Investment (FDI), underscoring worsening fiscal constraints.

“The gathering is an opportunity to reshape the development trajectory of the Global South at a time when global risks are converging faster than institutions can respond,” he stated.

He further revealed that about 25 percent of Emerging and Developing Economies (EMDEs) have lost access to international capital markets, making domestic revenue mobilisation increasingly critical.

Cardoso Flags Costly Cross-Border Payments

Also speaking at the meeting, Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, described cross-border payments among developing nations as slow, expensive, and fragmented.

According to him, global remittance corridors still cost over 6 percent, with settlement delays lasting several days, while compliance requirements continue to exclude Micro, Small, and Medium Enterprises (MSMEs).

“Improving cross-border payments is not simply a technical reform; it is a macroeconomic and development priority,” Cardoso said.

He emphasised that digital transformation of payment systems could lower costs, speed up settlements, and improve participation in global trade.

Fiscal Space Shrinking for EMDEs

Director and Head of the G-24 Secretariat, Iyabo Masha, noted that member countries face constrained fiscal space amid heightened global uncertainty and structural economic shifts.

She stressed that many developing economies must now focus on restoring development momentum, maintaining macroeconomic stability, and financing long-term transformation in a volatile global environment.

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The Central Bank of Nigeria (CBN) has unveiled its policy direction for 2026, with Governor Olayemi Cardoso declaring that the incoming year will focus on restoring banking stability, modernising the financial system, deepening payment innovation, and strengthening the nation’s economic resilience.

Speaking at the Chartered Institute of Bankers of Nigeria (CIBN) Bankers’ Dinner in Lagos, Cardoso said the Bank’s 2026 blueprint aligns with its mandate to maintain monetary stability and protect the financial system. According to him, the CBN is prioritising rigorous bank supervision, stronger governance, and sustainable credit expansion to safeguard depositors across the country.

Cardoso emphasised that delivering “durable price stability” remains at the centre of monetary policy, noting that the Bank will refine its inflation-targeting framework using advanced analytics to better anchor expectations and steadily reduce inflation.

He added that Nigeria’s payment ecosystem will undergo significant upgrades in 2026. Digital rails will be strengthened, financial inclusion expanded, and contactless payment adoption accelerated. Cardoso disclosed that over 12 million contactless cards are already in circulation, demonstrating rising consumer confidence in digital transactions.

On fintech regulation, Cardoso stated that while innovation will continue to be encouraged, the Bank will enforce stricter licensing conditions, enhance cybersecurity frameworks, strengthen data governance, and create clearer boundaries for digital-asset experimentation. He stressed that consumer protection will remain a top priority.

The governor also revealed that the CBN is building stronger institutional capacity by improving staff skills, streamlining internal processes, and reducing approval bottlenecks. Partnerships with regulators, industry leaders, and international institutions will also be deepened to boost Nigeria’s standing in global financial governance.

Cardoso made a major policy declaration: the CBN will no longer finance government deficits. He described the end of deficit financing as critical to maintaining fiscal and monetary discipline, saying, “There will be no return to the practice of financing fiscal deficits by the Central Bank.”

He noted that fiscal authorities are reinforcing this shift through reforms such as the Revenue Optimisation Framework, the establishment of a National Revenue Agency, and upgrades to the Treasury Single Account.

Cardoso highlighted Nigeria’s strong macroeconomic rebound in 2025. Foreign-capital inflows reached US$20.98 billion in the first 10 months of the year — a 70 percent rise compared with 2024 and a 428 percent jump from 2023. He added that foreign-exchange reserves climbed to US$46.7 billion by mid-November, the highest level in nearly seven years. According to him, the most significant achievement is that reserves are being rebuilt organically — through better market performance, rising non-oil exports, and stronger investment inflows, not borrowing.

Earlier in the year, the Bank extended its Payment System Vision roadmap to 2028 to enhance cybersecurity and accelerate payments modernisation. More than 40 fintech innovators now operate in the CBN’s regulatory sandbox, enabling safe experimentation of digital-finance solutions.

Cardoso affirmed that the CBN will continue to provide forward guidance, safeguard the integrity of financial markets, deploy artificial intelligence to strengthen decision-making, and deepen collaboration with local and global regulators.

He said the Bank’s 2026 priorities are “practical, measurable, and fully aligned” with its mission to protect financial and monetary stability, while ensuring the Nigerian economy becomes more resilient, transparent, and investor-friendly.

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