Our Reserves Are Way Above Recommended Levels — Cardoso

Governor of the Central Bank of Nigeria, Olayemi Cardoso, has dismissed concerns over recent fluctuations in the country’s external reserves, insisting that Nigeria remains in a strong and comfortable position, with buffers well above global benchmarks.

Speaking the Nigerian press conference to round up the International Monetary Fund/World Bank Spring Meetings in Washington DC, Cardoso said movements in the reserves are both expected and consistent with a more liberalised foreign exchange framework.

The external reserves which had hit a 13 year high earlier this year at $50.45 billion as of February, has in recent time seen some depletion which the CBN Governor dismisses as a normal trend. “On the decline in reserves and whether there is any cause.

“The answer is there isn’t. It is normal. And beyond it just being normal, we already have way beyond what the International Monetary Fund (IMF) recommends for minimum reserve levels. We are in a very comfortable position. So, it is normal, it will happen, and honestly there is nothing to worry about,” he stated.

The apex bank governor, however, expressed concern over what he described as heightened public sensitivity to minor fluctuations, noting that Nigeria’s foreign exchange market has undergone a structural shift from a heavily managed regime to a more market-driven system.

“In fact, if there is anything that worries me, it is the reaction of Nigerians to a small swing here and there. I feel the days of that are gone. The foreign exchange system that used to operate in those days is very different from what it is now,” Cardoso said.

He emphasised that the current framework allows for greater liquidity and investor flexibility, reducing the need for frequent central bank intervention. “Then you had a central bank that was primarily the one determining that model. That is different now, it is market-driven. There is more liquidity, there is confidence, investors come in and go out as they like,” he added.

According to him, the depth of liquidity in the market has reduced the significance of reserve levels as a primary indicator of stability, compared to previous years. “So why worry about something that moves modestly along the road of travel?

“That understanding will take time, and we have to keep explaining it. For example, the reserve levels and the fact that the intervention of the central bank is not much, the market is so liquid that it operates on its own. The reserve level is a great thing to have, but focusing on it when you have such huge liquidity in the market is less relevant than it was about three years ago,” Cardoso added.

On diaspora remittances, the CBN governor disclosed that inflows are currently averaging about $600 million monthly, with a target of reaching $1 billion per month before the end of the year. “On the issue of remittances the target is a billion dollars per month by the end of the year. Where are we now? Roughly about $600 million per month,” he said.

Answering questions on the remittances, Cardoso highlighted ongoing efforts to deepen diaspora engagement, pointing to recent high-level interactions in the United Kingdom and the United States as part of broader strategies to boost inflows.

“You made reference to the fact that I had said nothing about diaspora engagement, and you’re correct. The reason is twofold. One, we had a very big event a couple of weeks ago when the President visited the UK on an official visit. At that time, we engaged the diaspora extensively because London is a very critical point for diasporas. We have also done the US a couple of times,” he explained.

He stressed that the central bank’s role has been largely facilitative, creating an enabling environment for commercial banks to develop tailored products that cater to diaspora Nigerians. “More importantly, the Central Bank has done a lot of the work that should now enable the process to work through the banking system. What we are doing now is encouraging the banks to come up with products,” Cardoso noted.

The introduction of measures such as easier access to Bank Verification Numbers (BVN) for Nigerians abroad, he said, was part of efforts to remove bottlenecks and integrate diaspora flows into the formal financial system.

“That is why the whole issue of enabling them with BVN came about, by listening, understanding that there were problems, and seeing how to take those problems out, and of course bringing them into the fold,” he said.