CBN says economy showing signs of improvement but significant work remains

The Central Bank of Nigeria (CBN) has stated that the Nigerian economy is beginning to show clearer signs of improvement, but it warned that significant work still lies ahead before the country can achieve full stability and sustainable growth. The apex bank noted that although key indicators are shifting in a more positive direction, the nation must maintain policy consistency, strengthen structural reforms and address long-standing weaknesses across multiple sectors to sustain the progress being recorded.

According to the Bank, recent monetary tightening measures and stronger liquidity management have begun to ease inflationary pressure, even though inflation remains elevated. The CBN explained that its continuous adjustments to the monetary policy rate, aggressive mop-up of excess liquidity, and firm stance against speculative activities in the foreign exchange market have all contributed to early signs of inflation moderation. These efforts, the Bank added, are complemented by interventions aimed at improving local production and reducing dependence on imports, which historically have amplified price volatility.

The CBN noted that the foreign exchange market is stabilising more visibly as improved liquidity begins to filter into the economy. Recent reforms — including the unification of exchange rate windows, enhanced transparency mechanisms and stricter oversight of FX transactions — are contributing to increased investor confidence. The Bank stated that the naira has enjoyed a period of relative stability following months of intense volatility driven by imbalance in demand and supply, currency speculation and external pressures. Even though vulnerabilities remain, it said, the current trajectory is more encouraging than what was observed earlier in the year.

Furthermore, the CBN disclosed that the banking sector remains strong despite the pressures of the prevailing economic environment. Stress tests conducted across the industry indicate that banks continue to maintain healthy liquidity levels and adequate capitalisation, even as the Bank increases regulatory surveillance. The apex bank emphasised that it is paying close attention to rising non-performing loans as well as emerging threats such as cybercrime and digital fraud. According to the CBN, disciplined regulation and proactive oversight are essential to preserving the health of the financial system.

Beyond monetary and financial sector developments, the Bank stressed that the broader economy still faces deep-rooted challenges that must be addressed for Nigeria to achieve meaningful growth. High production costs driven by energy shortages, logistics bottlenecks and foreign exchange constraints continue to weigh heavily on manufacturers and small businesses. The CBN identified the power sector as one of the most critical barriers to economic expansion, arguing that Nigeria cannot industrialise without resolving longstanding inefficiencies in electricity generation, transmission and distribution.

Agriculture, which remains central to food security and employment, is also struggling with issues such as insecurity in farming communities, climate-related disruptions and rising input costs. These factors have kept food inflation high despite increased efforts to support farmers. The Bank noted that food price stability will only be achieved when Nigeria is able to boost domestic food production and ensure safe access to farmlands across the country.

The apex bank also highlighted the need for deeper collaboration between monetary and fiscal authorities. While monetary policy has played a central role in stabilising the macroeconomic environment, the CBN insisted that it cannot work in isolation. It called for sustained fiscal reforms, improved public expenditure efficiency, strengthened revenue mobilisation and strategic investments in infrastructure capable of unlocking growth across multiple sectors. According to the Bank, Nigeria’s economic transformation must be driven by coordinated action, not fragmented policymaking.

The CBN observed that the rise of technology and innovation is changing the global economic landscape, making it imperative for Nigeria to integrate digital tools into policymaking, business operations and governance processes. The Bank stressed that investments in digital infrastructure, data analytics, fintech expansion and automation can help stimulate productivity, deepen financial inclusion and support new economic opportunities. It added that the country must position itself to take advantage of global technological shifts, particularly in industries where Nigeria has comparative advantages.

While acknowledging the progress made so far, the CBN cautioned that the road ahead requires discipline and resolve from both the government and the private sector. It urged Nigerians to support reform efforts and emphasised that short-term discomfort is sometimes necessary for long-term stability. The Bank assured that it would continue to deploy tools within its mandate to stabilise prices, maintain financial system integrity and support sectors with high growth potential.

 

The CBN emphasised that restoring full confidence in the economy will require patience but insisted that the country is now on a firmer path than before. It reiterated its commitment to ensuring that the positive signs emerging across inflation, foreign exchange and financial stability are not temporary but evolve into sustained improvements capable of lifting the entire economy.