Cardoso: Walking the Tight Rope of Nigeria’s Debt Burden, by Rahma Olamide Oladosu
Indeed, Nigeria was sitting on an economic time bomb prior to the dawn of May 29, 2023, and the pressure of debt servicing was the fuse that kept burning. It is baffling and frankly frustrating that more than 90 percent of our national revenue was going toward paying debts rather than building hospitals, schools, roads, or even ensuring food security. As a Nigerian who witnesses the daily struggles of ordinary citizens, I find it deeply concerning that debt repayment is still an issue in our economy today. While politicians and bureaucrats speak of macroeconomic adjustments and fiscal realignments, many of us are simply trying to afford a loaf of bread. And so, when someone like Yemi Cardoso steps into the stormy waters of the Central Bank with a promise to restore order and discipline, I pay attention, and I want others to do the same.
Debt servicing in itself is not inherently bad. Most nations borrow. What distinguishes a stable economy from a fragile one is how the debt is managed and whether borrowing is tied to growth-generating investments. Unfortunately, Nigeria’s borrowing in the last decade has largely funded consumption, covered deficits, and supported subsidies that drain resources. The result is what we face today: a debt service burden that consumes development funding and leaves little room for progress.
When Yemi Cardoso stepped into his role as governor of the Central Bank, the institution was already facing intense criticism for a lack of transparency and questionable interventions. His predecessor, Godwin Emefiele, had blurred the lines between fiscal and monetary policy, with the Central Bank increasingly acting as a lender to the federal government. Under Emefiele, the bank’s advances to the government exceeded legal thresholds, flooding the economy with liquidity, stoking inflation, and eroding investor confidence. What Cardoso inherited was not just an institution but a deep-seated credibility problem.
To his credit, Cardoso did not shy away from the enormous task at hand. From the outset, he made a bold and commendable pledge to return the Central Bank to its core mandate of price stability and financial system oversight. This shift was not just necessary. It signaled a real commitment to reform. His decision to end the bank’s direct fiscal interventions marked a courageous and principled departure from the unsustainable policies of the past. He has since led the institution with a steady hand and a clear focus on transparency, professionalism, and rebuilding trust.
It is important to recognise how difficult such a shift can be, especially in a system where the Central Bank had become enmeshed with government financing. Yet, Cardoso has been deliberate in his steps. His emphasis on institutional independence and data-driven policy is not only restoring the credibility of the bank but also sending a strong message to both local and international observers: Nigeria is serious about reform.
Still, a change in tone is not the same as a change in policy, and Nigeria’s economic wounds are deep. With more than 90 percent of government revenue going into debt servicing, there is hardly any space left for capital investments or meaningful development programs. The country is trapped in a cycle where it must borrow to meet its obligations, while interest costs continue to rise due to currency depreciation and high global interest rates. The consistent fall of the naira against the dollar has made external debt more expensive, worsening the situation even further.
Even in the face of these constraints, Cardoso has taken bold action. The decision to float the naira, although difficult and politically sensitive, was a crucial move toward correcting long-standing distortions in Nigeria’s foreign exchange market. The initial impact was tough, but the long-term goal is clear: to create a more transparent and investor-friendly economy. The unification of exchange rates has begun to rebuild confidence among foreign investors, and although inflation remains high, the underlying strategy shows foresight and a willingness to tackle systemic problems head-on.
Cardoso’s leadership also shines in his commitment to institutional reform. He has ordered audits and forensic reviews of the bank’s past operations, including the controversial naira redesign and multiple intervention programs. These reviews are not mere box-checking exercises. They are critical steps toward restoring the integrity of the apex bank. This is a level of accountability that Nigerians have long demanded, and it is refreshing to see a leader who is willing to examine the past in order to build a more stable future.
Of course, some critics feel he has not gone far enough. They argue that he must do more to confront the federal government’s fiscal recklessness and reduce the country’s borrowing appetite. But it is important to acknowledge that monetary policy does not exist in isolation. Cardoso cannot control fiscal decisions, but he can ensure that the Central Bank no longer serves as a crutch for bad habits. By firmly closing the tap on Ways and Means financing and reinforcing fiscal-monetary boundaries, he has already taken a stand that many before him were reluctant to make.
At the same time, Cardoso faces the reality of public discontent. Nigerians are grappling with rising costs, unstable incomes, and widespread hardship. They want solutions they can feel in their daily lives, lower food prices, affordable energy, and a naira that holds its value. While Cardoso’s policies may be technically sound, he must continue working to connect them to real, visible improvements. Communicating clearly with the public, explaining the reasons behind policy decisions, and showing empathy in the face of hardship will be essential.
On the global front, Cardoso has made an impression. International lenders and institutions like the IMF and World Bank have long called for reform in Nigeria’s economic management. Under Cardoso’s leadership, the Central Bank has returned to orthodox monetary practices, a move that aligns with global expectations and helps Nigeria reestablish its economic credibility. Investors and credit agencies are beginning to look again at Nigeria, and that renewed interest is due in no small part to the stability and discipline he is reintroducing.
It is worth stating plainly. Cardoso is not a miracle worker, nor has he pretended to be one. He did not create Nigeria’s debt crisis, and he cannot solve it alone. But he is one of the few people in a position to lead a meaningful reset, and so far, he has approached that responsibility with integrity, courage, and clarity. By focusing on the fundamentals, restoring the bank’s independence, improving policy transparency, and drawing a clear line between monetary and fiscal responsibilities, he is helping to lay a foundation for a more resilient economy.
Nigeria is at a critical turning point, and so is its Central Bank. The era of reckless borrowing and policy improvisation must come to an end. The work Cardoso is doing may not produce immediate relief, but it represents a much-needed shift toward discipline and long-term thinking. His legacy may ultimately be defined not by applause but by whether Nigeria breaks free from its debt trap and reclaims control of its economic destiny.
The stakes are high. The challenges are enormous. But with committed leadership like Cardoso’s at the helm, there is finally a reason to hope that the tide may be turning.
