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| Olayemi Cardoso |
In Bangkok this week, on the sidelines of the 2026 IMF-World Bank Annual Meetings, Central Bank of Nigeria (CBN) Governor Olayemi Cardoso delivered a clear message to global investors: Nigeria will not declare victory on inflation until it reaches single digits. The rate has fallen sharply from its peak of roughly 34–35 percent (hit around late 2024) to about 15 percent, a significant achievement after years of punishing price increases. Yet Cardoso insisted this progress is insufficient.
“The reason why we felt it was important to give ourselves this as a target is to recognise the fact that inflation is probably the biggest tax on the poor,” he said. “Inflation has gone from about 34, 35 per cent to about 15, and yes, that’s a significant decrease, very significant. But what we are basically saying is that we are not going to rest.”
High inflation has long eroded the purchasing power of ordinary Nigerians, particularly low-income households for whom food and basic necessities consume the bulk of spending. Cardoso framed the single-digit goal not merely as a macroeconomic target but as a social and equity imperative. The CBN’s shift toward a more formal inflation-targeting framework, he added, aims to enhance transparency so businesses and investors can better anticipate policy direction.
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From Peak Pain to Disinflation: Context and Hard-Won Gains
Nigeria’s inflation surge was multi-causal. The 2023 removal of fuel subsidies, naira flotation/unification of multiple exchange rates, lingering insecurity in food-producing regions, high energy and logistics costs, and earlier monetary financing of deficits all contributed. Under Cardoso, who assumed office amid these adjustments, the CBN returned to orthodox tools: aggressive rate hikes (Monetary Policy Rate rising well above 25 percent at points), higher cash reserve requirements, an end to deficit monetisation, improved data and communication, and FX market reforms that narrowed the official-parallel gap dramatically—at times to under 2 percent.
The results show in consecutive months of disinflation. Food inflation, historically the dominant driver and heavily weighted in the CPI basket (even after rebasing), has moderated in recent readings, though supply-side constraints remain. External reserves have strengthened markedly, reaching multi-year highs that Cardoso described as the highest in 18 years—providing a buffer against global shocks such as conflicts or trade uncertainties. Naira stability and periods of appreciation have helped dampen imported inflation, with benefits cascading to businesses and households, even if many citizens still feel the cumulative impact of earlier price jumps.
“What does this mean for me? I’m not feeling it. You do, you feel it definitely,” Cardoso acknowledged, while arguing that without the reforms, pressures would have been far worse. Stability, in his view, is the platform for investment and growth.
Analysts and successive Monetary Policy Committee statements have linked the progress to tighter policy transmission and better-anchored expectations. Projections earlier pointed toward continued declines into 2026 and potentially single digits later, though external risks (including Middle East-related energy pressures that briefly interrupted the trend) underscore the need for vigilance. The CBN has signalled it will maintain a tight stance until sufficient progress is locked in.
Fiscal Side of the Equation: Oyedele’s Reform Agenda
Finance Minister and Coordinating Minister of the Economy Taiwo Oyedele used the same investor engagement to outline structural reforms aimed at addressing root causes of inflation and improving the investment climate. Food prices remain a key inflation driver, so agriculture and food supply chain fixes are prioritised—tackling production bottlenecks, logistics, and coordination with states.
On power, Oyedele was blunt: “You cannot power a $1 trillion economy in darkness. It’s impossible.”
Reliable electricity is essential for industrialisation and the government’s growth ambitions. Measures under consideration include better pricing signals, transmission upgrades, efficiency gains, and attracting private capital. Broader regulatory reform targets the heavy cost of doing business. Oyedele estimated that overregulation, unclear rules, multiple charges, and excessive burdens cost the economy more than the combined revenue from corporate tax, personal income tax, and VAT. A new framework is being developed to prevent uncoordinated introduction of fees, licences, and rules by agencies.
Other priorities include better access to reliable economic data (taxation, revenue, employment, inflation) and shifting investor focus from short-term portfolio flows toward longer-term commitments—factories, production capacity, and job creation.
“We don’t just need to create jobs; we need to create decent jobs,” he said, noting that many Nigerians remain poor despite employment. The Economic Development Incentive offers tax credits (rather than pure tax holidays) conditioned on performance to reduce abuse.
Oyedele also addressed market concerns around taxation of government securities, liquidity, and communication, promising clearer guidance. Coordination with states on inflation-reduction measures, complete with responsibilities and timelines, forms part of the approach.
Debt Management and Private-Sector Validation
Debt Management Office Director-General Patience Oniha clarified fourth-quarter 2026 borrowing plans amid investor questions on bond supply and uncertainty. Issuance would cover both refinancing of maturities and new borrowing, calibrated to interest rates, market conditions, and demand.
Borrowing volumes had risen after the 2026 budget passage following a slower pace earlier in the year.
The Dangote Group provided a high-profile private-sector endorsement. Chief Economist Hassan Mammud, speaking for Aliko Dangote, credited greater policy consistency and transparency with improving confidence and enabling planning. The group’s roughly $17 billion refinery investment would have been far harder to sustain under inconsistent policies. Export-free zone incentives also helped.
Mammud urged investors to enter Nigeria, calling it a model for the continent, and referenced the group’s planned major refinery investment in Kenya as an extension of lessons learned at home.
Cardoso welcomed such feedback as evidence that policy credibility attracts capital. The ultimate aim, he stressed, is conditions that support investment, expansion, and better living standards for the broader population—not just markets.
Analysis: Progress, Persistent Challenges, and What Single Digits Would Mean
Nigeria’s disinflation is real and hard-won, reversing one of the most severe inflation episodes in recent decades. Stronger reserves, FX market normalisation, and the end of monetary financing represent structural improvements that reduce vulnerability. For investors, clearer monetary frameworks, regulatory streamlining, and fiscal discipline lower risk premiums and improve the attractiveness of longer-horizon projects in manufacturing, agriculture, energy, and infrastructure.
Yet challenges linger. Food inflation is sticky due to insecurity, climate factors, poor infrastructure, and productivity gaps. Power deficits constrain industrial scaling. The cost-of-living impact of past inflation remains acute for many households, and “reform fatigue” is a political risk if gains are not felt quickly enough. Global headwinds—energy prices, trade tensions, or tighter international financial conditions—can still disrupt the path. Achieving and sustaining single-digit inflation will require sustained monetary discipline plus complementary fiscal and structural reforms on the supply side. Coordination between CBN, the finance ministry, states, and the private sector is essential, as Cardoso and predecessors have repeatedly noted.
Single-digit inflation would restore real purchasing power more meaningfully, lower the cost of capital over time, support naira stability, and make Nigeria more competitive regionally. It would also validate the painful adjustment process begun in 2023. For a country targeting higher growth and a $1 trillion economy ambition, price stability is foundational rather than optional.
At the Bangkok meetings, Nigerian officials presented a coherent narrative of stabilisation transitioning into growth-oriented reforms. Investors heard commitments on inflation, business environment, data, power, agriculture, and policy predictability—backed by one of Africa’s largest industrial players. Delivery will determine whether the narrative becomes lasting reality. Sustained progress on inflation toward single digits, paired with tangible improvements in electricity, food supply, and regulatory ease, would mark a genuine inflection point for Nigeria’s economy and the welfare of its citizens.
Samuel O. Sulaimon is the founder and Editor-in-Chief of Naijapiz. He covers News, Sports, Finance, Faiths, Education, Politics and Technology.
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