ABUJA, Nigeria (VOICE OF NAIJA)-The Federal Government of Nigeria says ongoing economic reforms have helped prevent a potential macroeconomic crisis and are gradually rebuilding investor confidence in the country.
Deputy Governor for Economic Policy at the Central Bank of Nigeria (CBN), Muhammad Abdullahi made this known on Thursday while speaking at the Agora Policy stakeholders’ dialogue on Nigeria’s economic reforms held in Abuja.
The event was held under the theme “Sustaining and Deepening Economic Reforms in Nigeria”.
Abdullahi explained that prior to the introduction of the reforms, Nigeria faced serious macroeconomic imbalances.
According to him, distortions in the foreign exchange market and the burden of unsustainable subsidies had placed enormous pressure on public finances.
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He said the country previously operated multiple exchange rates that allowed certain individuals to obtain foreign exchange at subsidised rates, sometimes between N400 and N450 to the dollar, and resell it for profit.
“This distortion alone cost the country about three per cent of its Gross Domestic Product (GDP) and discouraged foreign investment,” he said.
Abdullahi added that the situation also promoted rent-seeking activities, as some businesses focused more on arbitrage opportunities than productive investment.
He noted that alongside the foreign exchange distortions, Nigeria also spent heavily on petroleum subsidies, which together accounted for about six per cent of the nation’s GDP.
“These subsidies were simply not sustainable and had brought the economy to the brink,” Abdullahi added.
The deputy governor said the situation worsened as foreign portfolio investments declined while the country accumulated about seven billion dollars in outstanding foreign exchange obligations.
He explained that the backlog undermined investor confidence because businesses had already paid funds to the central bank but could not access foreign exchange for over a year in some cases.
“When we assumed office in October 2023, we met a backlog of seven billion dollars, this severely damaged the credibility of the economy,” he said.
He said the CBN quickly began reviewing the claims and engaged an international auditing firm to verify the obligations.
According to him, after the audit process, about 4.5 billion dollars of the claims were confirmed and paid, while 2.5 billion dollars were considered invalid due to procedural irregularities.
He added that settling the verified obligations was essential for restoring credibility in Nigeria’s financial system.
Abdullahi further stated that the apex bank worked closely with fiscal authorities to tackle structural issues in the economy, including declining oil revenues and weak foreign direct investment.
He noted that Nigeria earned about 92 billion dollars from oil exports in 2012 but generated less than two billion dollars in 2023 due to falling production and other structural challenges.
“This shows the magnitude of the challenges we faced when we began the reform process,” he said.
He explained that the reforms required allowing the naira to reflect market realities in order to attract foreign exchange inflows and stabilise the economy.
Abdullahi disclosed that Nigeria’s net external reserves were about 800 million dollars when the new administration took office, despite gross reserves appearing higher because of swap obligations and other liabilities.
“Today, net reserves have risen significantly, with total reserves standing at about 32 billion dollars,” he said.
The deputy governor said the reforms had begun producing results, noting that inflation had steadily declined over the past 19 months while food inflation had dropped to its lowest level in more than a decade.
He said the government aimed to achieve single-digit inflation, which would help strengthen the purchasing power of households.
Abdullahi also noted that non-oil exports had rebounded strongly, with Nigeria earning about six billion dollars in 2025 and targeting 12 billion dollars in the near future.
He added that business activities were also improving, as the Purchasing Managers’ Index showed the strongest expansion in about 10 years.
According to him, although the reforms were difficult, they were necessary to stabilise the economy.
“We did not really have the luxury of choice at that time, the economy was at a breaking point, and decisive action was required,” the deputy governor said.
Abdullahi acknowledged that challenges still existed, particularly in addressing the social impact of the reforms, even though the country had moved away from the severe economic imbalances of the past.
“We are not yet where we want to be, but the economy has turned the corner and is now on a stronger footing,” he said.
Also speaking, Sanyade Okoli, Special Assistant to the President on Finance and the Economy, said the administration of Bola Tinubu had implemented measures to stabilise the macroeconomic environment.
Okoli said the administration assumed office with a “Renewed Hope Agenda” aimed at improving Nigerians welfare through inclusive economic growth.
She emphasised that attracting investment was essential for inclusive development, noting that the government alone could not mobilise the resources required for large-scale economic expansion.
According to her, creating a favourable macroeconomic environment was therefore necessary to attract both local and foreign investment.
“Economic reforms required coordination between fiscal and monetary authorities.
“This administration remains focused on restoring fiscal stability while laying the foundation for inclusive and sustainable economic growth.
“Our goal is to ensure inclusive and sustainable growth that ultimately makes the lives of Nigerians better.”
Earlier, the Board Chair of Agora Policy, Ojobo Atuluku, said the dialogue was organised to examine ways to sustain, deepen and improve the ongoing economic reforms while building a stronger economic future.
Atuluku noted that significant reforms were ongoing across the economic sector, emphasising that change remained constant.
“Economic policy must never be a one-off event, it should be a constant conversation between those who design reforms, those who implement them, and those who are impacted by them.
“We must regularly touch base to ask:
How is it going? Where can we improve or be better? What do we need to do more of, or less of,” she said.
“At Agora Policy, our primary objective is to provide a dedicated space for the interrogation of policy issues and to bring clarity to policy directions.
“Our work under this current programme is broken into three critical pillars: Research, Convening and Actionable Policy,” she said.
She added that the dialogue was organised through a grant from the Nigeria Economic Stability and Transformation Programme (NEST), an initiative aimed at supporting economic growth and transformation in Nigeria with backing from the Foreign, Commonwealth and Development Office (FCDO).
Stakeholders at the event commended the government for implementing policies they described as effective and reaffirmed their commitment to supporting Nigeria’s development.
(NAN)