Nigeria's Central Bank Receives International Honor for Innovative Monetary Policy Initiatives

The Central Bank of Nigeria has received the prestigious "Central Bank of the Year" award at the 2026 Central Banking Awards, in recognition of its sweeping reforms that have helped stabilise the country's economy.

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This accolade was announced in a statement by the Central Banking Awards Committee, which attributed the bank's success to its policy reset and institutional reforms that restored confidence in Nigeria's financial system.

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The award acknowledges the bank's decisive return to orthodox monetary policy, improved governance, and reforms that strengthened investor confidence and market stability, as outlined in the statement.

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Prior to the reforms, Nigeria's economy was under severe strain, with rising inflation, weakening foreign exchange reserves, and a significant gap between official and parallel market exchange rates.

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By 2023, inflation had soared to 22.4 per cent, while foreign exchange liquidity had deteriorated, with a backlog of approximately $7bn in unmet obligations and a spread of over 60 per cent between official and parallel market rates.

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The country's economic stagnation and policy inconsistencies had caused Nigeria to slide from being Africa's largest economy in 2014 to fourth position, behind South Africa, Egypt, and Algeria, with monetary financing and subsidy-related interventions leaving policy in an "unsustainable position".

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A former senior central bank official was quoted as saying that the country had appeared to be "heading the way of Venezuela and Zimbabwe" due to concerns over fiscal instability, currency depreciation, and loss of central bank independence.

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However, following the appointment of Olayemi Cardoso as Governor in October 2023, the apex bank embarked on wide-ranging reforms aimed at restoring macroeconomic stability and rebuilding credibility.

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The new leadership prioritised ending quasi-fiscal interventions, tightening monetary policy, clearing foreign exchange backlogs, and re-establishing institutional independence, forming the foundation of a broader reform agenda anchored on transparency and discipline.

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A major component of the reforms was the overhaul of the foreign exchange market, with the CBN replacing multiple exchange rate windows with a unified, market-driven system based on a willing-buyer, willing-seller model.

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The CBN also introduced an electronic FX matching platform to improve price discovery and transparency, with Cardoso noting that "The naira now trades within a narrow, stable range" and the gap between official and parallel markets had shrunk to under 2 per cent, down from over 60 per cent.

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The central bank cleared outstanding FX obligations owed to sectors such as aviation and manufacturing, helping to restore business confidence, and as a result of improved FX liquidity, stronger capital inflows, and increased non-oil exports, Nigeria's gross external reserves rose to $46.7bn by November 2025.

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This represented the highest level in nearly seven years and provided more than 10 months of import cover, with the International Monetary Fund commending the reforms in its July 2025 Article IV assessment.

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The IMF noted that the measures taken had improved market confidence and supported liquidity in the foreign exchange market, and on inflation, the CBN adopted aggressive monetary tightening, raising interest rates from 18.75 per cent in 2023 to 27.5 per cent by November 2024.

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Although inflation initially surged to 34.80 per cent in December 2024 following subsidy removal and currency liberalisation, it later declined to 15.10 per cent by January 2026, with food inflation moderating to 8.9 per cent, reflecting improved price stability and tighter monetary conditions.

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The easing inflation trend enabled the apex bank to begin a cautious policy easing cycle, reducing the benchmark rate to 26.5 per cent by February 2026, with Cardoso stating that the bank remained committed to further reducing inflation.

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Cardoso emphasized that "the current double-digit rate cannot be acceptable" and highlighted the bank's transition towards an inflation-targeting framework supported by improved data and communication tools.

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Beyond monetary policy, the committee highlighted structural reforms in the banking sector, including a recapitalisation programme introduced in 2024 requiring banks to meet higher capital thresholds.

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More than 33 banks had raised fresh capital, with at least 20 already meeting the new requirements ahead of the March 31, 2026 deadline, while non-compliant banks risk licence downgrade, acquisition, or liquidation.

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The apex bank also strengthened supervision by transitioning towards Basel III standards to improve risk management and liquidity monitoring, and microfinance lending expanded by over 14 per cent, while digital credit products reached more than 1.2 million small businesses in 2025.

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The CBN reviewed the cash management system, introduced measures to improve ATM efficiency, and strengthened oversight of payment agents nationwide, with over 12 million contactless cards now in circulation and about 40 fintech firms supported through the CBN's regulatory sandbox.

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The statement further highlighted improvements in governance and compliance, including the establishment of a dedicated compliance department and enhanced anti-money laundering controls, which contributed to Nigeria's removal from the Financial Action Task Force grey list in 2025.

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International rating agencies acknowledged the impact of the reforms, with Fitch upgrading Nigeria's rating from B- to B with a stable outlook in April 2025, and Moody's raising its rating from Caa1 to B3 in May, citing improved fundamentals and policy credibility.

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Nigeria's return to the international capital market was marked by a $2.35bn Eurobond issuance in 2025, which was oversubscribed more than five times, despite the progress, the committee noted that challenges remain, including sustaining disinflation, completing banking sector recapitalisation, and strengthening institutional frameworks.

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The committee concluded that the scale of reforms undertaken by the apex bank had been significant, with a former official stating, "What the CBN has achieved is nothing short of remarkable".