CENTRAL Bank Governor, Mr Yemi Cardoso, is constantly being praised locally and globally for stabilising the foreign exchange (FX) market, but there are four key points that are often ignored in all the reviews.

The International Monetary Fund (IMF) praised the CBN governor in its Article IV Consultation report. It extolled Mr Cardoso, alongside Nigerian authorities, for “improved macroeconomic stability and enhanced resilience” but noted that a key aspect of Nigeria’s economic rebound was the restoration of the central bank’s independence.

In October 2024, the World Bank Vice President and Chief Economist , Mr Indermit Gill, commended the CBN governor for his approach to inflation management, noting that increasing interest rates by over 800 basic points was the right decision.

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There have also been commendations from other multilateral institutions, embassies and investors who say that there is now more certainty in the FX market than in the last decade. Cardoso deserves his flowers for stabilising the once-turbulent FX market and making the naira predictable.

However, there are 4 key areas where he is failing. One, Mr Cardoso has focused mainly on the demand side of the FX market and ignored the supply side. In Mr Cardoso’s nearly two years in office, he has introduced a number of reforms to manage the FX market.

In 2024, he introduced the Electronic Foreign Exchange Matching System (EFEMS), pegging the minimum tradable amount at $100,000, with clip sizes of $50,000 to promote transparency and efficiency in the FX market. In January 2025, Mr Cardoso launched the Nigerian Foreign Exchange Code (FX Code) with a view to promoting accountability, compliance, and transparency in the FX market. He has also unified the exchange rate and introduced stronger FX governance in the nation’s market.

He has also introduced reforms to weed out fake bureau de change operators (BDCs). He mandated all BDC operators to reapply for licenses abd has initiated BDC recapitalisation.

However, here lies the major flaw in Mr Cardoso’s policies. They atr all centered on the demand-side, rather than the supply side . Either he is planning to eliminate FX fraudulent BDCs or he is seeking measures to entrech transparency in the market. Analysts say these measures are critical but fault Mr Cardoso’s over-concentration on the demand side.

“There has not been an emphasis on the supply side in the last two years,” said a finance analyst, Mr Chinwe Izum, who works for a Lagos-based multinational company.

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“Our major problem is that we are not earning enough FX, which is a function of the supply side of the market. We have concentrated on managing what we have. But more can be done to drive FX inflows from the monetary side. Yes, there have been more inflows through portfolio investors, but the CBN can do more by creating incentives that will drive inflows.”

Izum’s position is not incontrovertible as proponents of the CBN policies argue that the reforms would naturally drive FX inflows, but Ethiopia provides an example that forex supply must be targeted. Ethiopia, like Nigeria, liberalised its FX market this year. But more than that, it has licensed independent non-bank entities to operate as foreign exchange bureaus, enhancing market access for FX transactions.

In November 2024, the National Bank of Ethiopia (NBE) announced a policy change allowing exporters to sell 50 percent of their FX earnings immediately and hold the remaining 50 percent indefinitely in their local accounts. This represented a major shift from the previous requirement that exporters must sell 50 percent of their inflows to banks immediately and the rest within a month.

The NBE has also raised a premium paid on the purchasing price of gold. Suppliers will get a premium of 35 percent, an increase from 29 percent previously. This is meant to encourage FX inflows. Gold is the second top export item of Ethiopia and brought $1.9 billion to Ethiopia in 2024. The bank ofers incentives to exporters to encourage them to repatriate their FX earnings. As a result of these policies, Ethiopia earned $32.1 billion in FX inflows in the financial cycle ending in June 2025, representing a sharp rise from $24.7 billion in the previous cycle. Ethiopia’s financial cycle runs between June and July of each year to June-July the following year.

“So, the CBN can do something if the fiscal side does not do much. We have the confidence in the market now, so we now need incentives to support the increased confidence,” said Mr Izum.

Another challenge is the cost of funds. The Monetary Policy Rate (MPR), which means the benchmark interest rate, has remained double-digit, at over 18 percent, since Mr Cardoso was appointed. It currently stands at 27.5 percent. Banks charge small businesses and manufacturers an arm and a leg for loans. First City Monument Bank (FCMB) raised its interest rate to manufacturers from 30 percent in February 2021 to 45 percent in February 2025, indicating an increase of 15 percentage over the four-year period, Economy Post had earlier revealed.

Rand Merchant Bank also raised its lending rate to 45 percent in February this year from 30 percent in 2021. Zenith Bank jacked up its interest rate for manufacturing loans from 30 percent in 2021 to 38.5 percent in 2025. First Bank of Nigeria raised its lending rate to manufacturers to 36 percent from 24 percent, while Eco Bank raised its rate to 35 percent from 25 percent four years ago.

Development Bank of Nigeria charges 15 percent and above to lend to small businesses and manufacturers, even with stringent conditionalities. It is also not accessible by many.

“This is indeed among the biggest weakpoints of Yemi Cardoso’s CBN. Funds are not readily available at single-digit rates and are not even sufficient when available. What is the purpose of reforms if they are not trickling down?” asked a Lagos-based small business owner, Ms Cynthia Usamere.

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“Banks are lending to their directors in single-digits as we have severally read in Economy Post while the CBN under Cardoso keeps mute, but MSMEs pay the 35 percent to 40 percent interest rates and there is no functional single-digit fund set aside for small businesses or manufacturers,” Usamere, who is the CEO of Shop DT Clothing, noted.

Apart from that, Mr Cardoso-led CBN has been unable to monitor some of the CBN funds domiciled in banks such as the Real Sector And Support Facility (RSSF), the Non-Oil Export Stimulation Facility (NESF), the Health Sector Intervention (HSI) Differentiated Cash Reserve Requirement Scheme, among others.

For instance, Wema Bank lent only 0.36 percent loan belonging to the National Housing Fund (NHF) and the Nigerian Mortgage Refinance Company (NMRC) to Nigerians seeking mortgage credit between January and June 2023, Economy Post had reported. Though this preceded Mr Cardoso, it has been a perisisting practice among banks.

Next to that is the lack of respite for farmers. Since Mr Cardoso-led CBN suspended the Anchor Borrowers Programme (ABP), there is yet no funding programme for farmers at a point 31 million Nigerians are facing severe food insecurity, according to the World Food Programme (WFP).

“The truth is that Mr Cardoso is just focused on reining in inflation at the expense of other critical matters. In other climes, central banks provide funding across industries to support the fiscal side of the economy,” said Mr Muhktar Bello, a Kwara State-based farmer.

“We all understand what happened under Godwin Emefiele as CBN governor, but the programme does not have to end because of the irregularities. It requires reforms, and Cardoso needs to wake up to what it requires to be s CBN governor in a developoing nation.”