MPC: Assessing the Early Impact of Cardoso’s Reforms
By Kabir Abdulsalam
Public debate around Nigeria’s economic reforms has largely focused on the immediate costs: higher interest rates, tighter credit conditions, and the adjustment pains associated with major policy changes.
Yet beneath the headlines, a different story is gradually emerging, one of improving economic fundamentals, strengthening external buffers, rising market confidence, and a Central Bank determined to restore credibility to Nigeria’s monetary framework.
Nearly three years into President Bola Ahmed Tinubu’s reform agenda and under the stewardship of Central Bank Governor Olayemi Cardoso, several key indicators suggest that difficult but necessary economic choices may be beginning to deliver results.
I recently read with interest an article by former Minister of Finance, Kemi Adeosun, titled “The CBN Is the Thermometer. Here Is the Fever.” Her central argument was that monetary policy alone cannot solve structural economic challenges.
It is a perspective that deserves careful consideration. Adeosun argued that many of the challenges confronting the economy, ranging from infrastructure deficits and food supply constraints to insecurity and logistics costs, extend beyond the remit of the CBN.
In many respects, she is right. However, the observation also highlights why CBN’s role in restoring macroeconomic stability has become increasingly important.
When Cardoso assumed office in September 2023, Nigeria faced a fragile monetary environment characterised by elevated inflation, foreign exchange distortions, declining investor confidence, and pressure on external reserves.
The policy response was inevitably difficult. The CBN embarked on a programme of monetary tightening aimed at stabilizing prices, improving market confidence, restoring transparency in the foreign exchange market, and strengthening external buffers.
While these measures initially coincided with painful adjustment costs, recent indicators suggest that the strategy may be gaining traction.
At the conclusion of the MPC’s 305th meeting, Cardoso disclosed that headline inflation rose marginally to 15.69 per cent in April 2026 from 15.38 per cent in March.
However, the broader trend presents a more encouraging picture. The 12-month average inflation rate declined to 19.16 per cent from 20.05 per cent in March, representing the sixth consecutive monthly decline. Month-on-month inflation also eased sharply to 2.13 per cent from 4.18 per cent.
For policymakers, these developments indicate that inflationary pressures are gradually moderating despite temporary disruptions linked to global events and supply-side shocks.
Perhaps one of the clearest indicators of progress is the improvement in Nigeria’s external reserve position.
Gross external reserves, which stood at roughly $33 billion before Cardoso’s appointment, have risen to approximately $49.49 billion as of May 2026. This improvement has strengthened Nigeria’s ability to absorb external shocks, support investor confidence, and enhance overall macroeconomic stability.
Although reserve levels occasionally fluctuate due to debt servicing obligations and external commitments, the broader trend remains positive.
The foreign exchange market also appears to be undergoing a gradual transformation. According to Cardoso, CBN’s direct interventions now account for only a small fraction of total market activity, while daily turnover has expanded significantly compared to levels recorded in 2023.
The implication is that the market is becoming more liquid, transparent, and capable of responding to supply and demand dynamics with reduced administrative intervention.
For investors, this represents an important signal of improving market confidence and policy credibility.
Economic growth figures provide another basis for cautious optimism. Nigeria’s economy expanded by 4.0 per cent in the fourth quarter of 2025, supported largely by strong performance in telecommunications, transportation, financial services, and other non-oil sectors.
The resilience of growth despite one of the most aggressive monetary tightening cycles in recent years suggests that underlying economic activity remains robust.
This is particularly significant because successful stabilisation programmes often require economies to endure short-term adjustment costs before longer-term gains become visible.
Businesses, especially SMEs, continue to express concerns about borrowing costs and access to affordable financing. These concerns are legitimate and deserve continued policy attention.
Indeed, Cardoso himself has acknowledged the need to support productive sectors through collaboration with development finance institutions and other stakeholders.
However, the broader economic picture suggests that the reforms are gradually strengthening the foundations upon which sustainable growth can be built.
Improved reserve levels, greater foreign exchange market transparency, moderating inflation trends, stronger policy credibility, and resilient economic growth all point toward an economy undergoing a difficult but necessary transition.
Economic reforms of this magnitude rarely produce immediate rewards. Across the world, countries that successfully stabilise their economies often experience periods when the costs of reform are visible before the benefits become widely felt.
Nigeria appears to be navigating that phase. The evidence increasingly points to improvements in inflation dynamics, reserve accumulation, market efficiency, and investor confidence.
Challenges undoubtedly remain. Businesses continue to seek lower financing costs, households are eager for greater relief from economic pressures, and policymakers must sustain momentum across fiscal and structural reforms.
Yet the broader trajectory suggests that the reforms being pursued by the Tinubu administration and implemented by Governor Cardoso are gradually laying the groundwork for a more resilient, competitive, and stable economy.
The full benefits may take time to materialise, but the foundations of recovery are becoming increasingly visible. In economic reform, that is often the first and most important step toward sustainable growth.
Kabir Abdulsalam writes from Abuja and can be reached via: [email protected]