During an engaging session in Washington, D.C., Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, along with Mr. Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), addressed foreign investors on the recent reforms implemented by the federal government, emphasizing the gradual restoration of confidence in the Nigerian economy. Cardoso announced that by December, the Nigerian Inter-Bank Settlement System (NIBSS) will launch a Bank Verification Number (BVN) platform aimed specifically at Nigerians in the diaspora. Additionally, the International Monetary Fund (IMF) has advised Nigeria and other African nations to enhance the efficiency, equity, and progressiveness of their tax systems.
Speaking to an audience predominantly composed of asset managers, investment bankers, and representatives from major global financial institutions such as JP Morgan and Standard Chartered, Cardoso expressed optimism, stating, “Confidence has returned to the market, and Nigerians are once again confident in their currency.” He noted that the rise in interest rates is expected to generate increased interest in local currency instruments.
Cardoso pointed out that local production would likely see a boost as it has become more cost-effective compared to importing goods. “With the harmonization of rates, those who regularly send money to Nigeria can now do so without resorting to unconventional methods,” he explained, highlighting a notable increase in remittances from the diaspora. He also mentioned recent engagements with diaspora communities to ensure the continuation of these positive trends.
When asked about the impact of rising fuel prices on the Monetary Policy Committee’s previous meeting, Cardoso confirmed that it was indeed a consideration, leading the committee to increase interest rates as a moderating measure. Edun added that the federal government is committed to raising oil production to two million barrels a day to boost revenue, referencing past levels and emphasizing that this goal is within reach with collective commitment from the government and the oil sector.
He elaborated on the financial landscape, revealing that severe debt servicing previously consumed nearly 100% of revenue, but the government has successfully reduced it to around 60%. Furthermore, the budget deficit was decreased to approximately 4.4% of GDP in the first half of 2024, with hopes of achieving a target of 4% for the year.
Edun emphasized the administration’s commitment to protecting the most vulnerable while implementing comprehensive reforms, particularly regarding Value Added Tax (VAT). He informed that while VAT on luxury goods is under review for increases, essential items needed by the vulnerable population will be exempt from such taxes.
In a previous presentation, CBN Deputy Governor Muhammad Sani Abdullahi praised the Tinubu administration for swiftly addressing crucial subsidies that have burdened the Nigerian economy for decades. He stated that the removal of these subsidies has led to improved revenue mobilization and highlighted efforts aimed at restoring price stability and regaining market credibility.
Abdullahi elaborated on fiscal measures to bolster public finance and enhance revenue collection through stronger tax administration. He noted ongoing efforts in banking sector recapitalization to reinforce the financial system. Prioritizing social safety nets for vulnerable populations is also a key focus.
“We are on the verge of a structural transformation,” Abdullahi affirmed, noting improvements in vital sectors such as agriculture and electricity as Nigeria transitions from an import-dependent economy to one driven by exports.
Lastly, Mr. Tanimu Yakubu, the Director-General of the Budget Office, reported positive trends in the 2024 budget performance. He said, “With actual revenue at N12.6 trillion against a target of N13.1 trillion, the deficit was about N500 billion, reflecting a shortfall of just 3.6%. This is an encouraging indication of our fiscal health.”
Regarding the anticipated launch of the BVN platform for Nigerians residing abroad, Cardoso reiterated its significance, saying it will facilitate the operation of local bank accounts and support business endeavors while addressing Know-Your-Customer (KYC) challenges worldwide. “Starting this December, Nigerians in the diaspora will no longer be burdened by long-distance travel for biometric verifications to access financial services,” he assured, calling it a major step toward improved financial inclusion and accessibility.
