Hurray: Nigeria Is Bankable Again!!!
By Rahma Olamide Oladosu
In a country often overwhelmed by economic anxieties and unpredictable policy shifts, real progress rarely announces itself with pomp and pageantry. It is seen in restored confidence, better numbers, and revived systems. One of the clearest signs that Nigeria is quietly regaining credibility on the global stage is the recent uptick in Letters of Credit used for foreign trade. According to the Central Bank of Nigeria, these transactions rose by 3.68 percent in the first four months of 2025 compared to the same period in 2024. Behind that modest number is a much bigger story. Nigeria is becoming trustworthy again and that trust is being rebuilt through thoughtful reforms and steady leadership from the CBN under Governor Olayemi Cardoso.
Nigeria’s international trade environment had long been defined by uncertainty. Foreign exchange was scarce, monetary policy was erratic, and faith in the financial system was dwindling. Many importers were left to risk their capital through prepayments, often bypassing formal instruments like Letters of Credit due to a lack of confidence in the system.
So, the resurgence of Letters of Credit is far more than just a shift in trade financing preference. It is a reflection of a deeper systemic recovery. Nigerian banks are regaining the ability to promise international payments, and exporters abroad are beginning to believe that Nigeria can and will honour those commitments. That is the true currency of progress: trust.
What we are witnessing is a product of what can best be described as the Cardoso effect. Governor Cardoso has brought a refreshing sense of calm, professionalism, and policy clarity to the Central Bank. In contrast to his predecessors who often relied on headline-making announcements, Cardoso’s method has been deliberate and quiet. Yet, the impact is unmistakable.
Under his watch, the Central Bank has moved decisively to clean up the foreign exchange market, reduce the disparity between official and parallel rates, and improve the management of external reserves. These moves may seem technical, but they speak directly to investor sentiment and trade confidence. More importantly, they signal that Nigeria is done with improvisation. A rules-based approach is back and it is working.
Monthly data may show fluctuations, but the trend speaks volumes. January 2025 recorded LC transactions of 64.55 million dollars, up from 58.33 million dollars in the same month last year. In February, the volume jumped to 95.59 million dollars, showing increased market activity, though still slightly below the 2024 figure. March dropped to 43.53 million dollars, followed by a bounce back in April to 64.29 million dollars. Volatility aside, the renewed usage of LCs reveals a growing sense of trust in Nigeria’s external sector and monetary leadership.
Foreign exchange access remains tight for many businesses, and Nigeria’s external debt servicing still casts a long shadow. Between January and April this year, the country spent 2.01 billion dollars servicing external debt, a staggering 50 percent increase from the previous year. That amount now accounts for more than three quarters of total forex outflows. The implications are clear: even the best monetary policies can be undermined by fiscal imbalances if not addressed decisively.
Despite these pressures, Nigeria’s foreign exchange reserves stood strong at 38.56 billion dollars as of late May. That is not just a statistic; it is a foundation. It gives Nigerian banks the confidence to issue LCs and international partners the comfort to accept them. It is also a testament to the Cardoso-led Central Bank’s careful stewardship and commitment to stability.
Letters of Credit are not just bureaucratic tools. They are economic instruments that reflect the health of a nation’s credibility in the global market. When more Nigerian firms are able to engage in trade using LCs, it means Nigeria is once again seen as a partner that can be trusted, a country whose financial system is anchored in transparency and governed by rules.
This shift will gradually have ripple effects. Lower risk in transactions. More competitive pricing. Stronger ties to global supply chains. And most importantly, a boost in the confidence of both local entrepreneurs and foreign investors. Rebuilding trust takes time, but with Governor Cardoso at the helm, Nigeria is undeniably heading in the right direction.
Governor Cardoso’s leadership stands out not only for what he has achieved in technical monetary reforms but also for what he represents: a return to integrity in public financial management. His background as a seasoned economist and former chairman of a major Nigerian bank reflects in his approach to governance. His policy choices are not reactive but guided by data and long-term planning. That level of stability is rare and precious in Nigeria’s economic history.
Moreover, the Governor has managed to strike a delicate balance between encouraging market confidence and maintaining institutional discipline. By restoring the autonomy of the Central Bank, eliminating illegal FX windows, and committing to regular data publication, Cardoso has sent an important message to the international community: Nigeria is serious about reform.
The global financial system watches for these signals. Investors and foreign governments alike need to believe that their Nigerian counterparts operate under consistent and predictable rules. With improved trade financing mechanisms now taking root, thanks to better use of LCs, we are witnessing not just a restoration of function but of faith.
The road ahead remains steep. Structural weaknesses such as low industrial output, heavy import dependence, and weak public revenue systems must be addressed. But what has changed thanks to the Central Bank’s quiet revolution is that the tone has shifted. The marketplace now listens when Nigeria speaks.
The Central Bank no longer sends mixed signals. It speaks with discipline, direction, and data. It is this kind of leadership that separates short-term recovery from long-term credibility. And while many of Nigeria’s challenges remain, the gains in policy confidence are laying a solid foundation for recovery.
Governor Cardoso may not be making headlines every day, but he is doing something far more powerful. He is restoring the credibility of one of Nigeria’s most critical institutions. Through consistent, clear, and professional monetary governance, he is helping Nigeria reenter the global financial system as a country that honors its commitments.
That is why the rise in Letters of Credit, small though it may seem, is a sign of a bigger change. Nigeria is not just conducting trade. Nigeria is rebuilding trust. And in an economy where trust is the most valuable currency, that is a breakthrough worth celebrating.
