Nigeria recorded a $6 billion current account surplus in the first half of 2024 as impact of several economic reforms begin to pay off, the Central Bank of Nigeria (CBN) has said.

In a report on the economy, the apex bank said reduction in petroleum product imports supported by improved domestic refining capacity, a growing focus on non-oil exports and higher remittance inflows helped to support the positive current account balance.

According to the apex bank, the market has also supported over $9 billion in capital outflows over the past year as investors were able to freely repatriate capital and dividends without the need to wait for several months as experienced in the past.

It said an enabling policy environment has led to a doubling of monthly remittances from an average of $300 million in 2023 to nearly $600 million in August 2024.

“We are committed to further integrating the Nigerian diaspora into our financial system, exemplified by the introduction of the non-resident Bank Verification Number registration,” it said.

Against all odds, CBN Governor, Olayemi Cardoso courageously started series of bold reforms many considered long overdue. The reforms were unveiled and their implementation took off immediately including exchange rate unification.

The exchange rate reforms saw Cardoso unifying all multiple rates into the Investors and Exporters (I&E) forex window.

That policy required that all applications for medicals, school fees, Business Travel Allowance/Personal Travel Allowance, and SMEs would continue to be processed through the I&E window. The operational changes to the foreign exchange market also include the re-introduction of the “Willing Buyer, Willing Seller” model at the I&E Window.

Furthermore, the introduction of the electronic FX matching system, which has proven effective in other markets is to enhance the functionality of the foreign exchange market in the country. The reviewed FX guidelines is to boost transparency and governance in the foreign exchange market and provide the needed confidence to domestic and foreign operators.

For instance, these guidelines goals include to achieve ethical practices, real-time reporting, and regulated interbank trading while mandating compliance from banks, dealers, and BDC operators.

Separately, the naira has appreciated steadily, supported by increased dollar inflows and the launch of the Electronic Foreign Exchange Matching System (EFEMS), which has boosted market confidence by facilitating transparent and efficient FX transactions.

Cardoso and his team have over time, made achieving stable exchange rate, curbing inflation, strengthening banks’ capital buffers, and fostering an environment conducive to the success of both businesses and individuals.

To ensure these goals are achieved, the CBN leadership has in the past year rolled out several measures which include monetary policy tightening meant to tackle inflation by raising Monetary Policy Rate (MPR) and Cash Reserve Ratio (CRR) by 850 basis points (bps) and 12.5 percentage points (ppts) to 27.5 per cent and 45 per cent respectively.

The apex bank team also lowered Loan to Deposit Ratio (LDR) by 15.0ppts to 50 per cent created significant mileage that ignited the ongoing naira rally.

In a major push to boost forex availability in the economy, the apex bank authorised International Oil Companies (IOCs) operating in Nigeria to sale 50 per cent of bulk FX proceeds at domestic forex market. The other 50 per cent FX proceeds ate to be sold after 90 days.

Credit: thenationonlineng.net

Nigeria’s current account surplus hits $6b

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