Cardoso: Nigeria Ready to Use All Tools to Manage Inflation

*NEPZA, FTZ urge CBN to speed up approval for offshore banking

*Say initiative will ease pressure on Naira

Emmanuel Addeh and James Emejo in Abuja

The Central Bank of Nigeria (CBN) is prepared to use any “tools at our disposal” to manage inflation, Reuters quoted its head, Olayemi Cardoso, as saying yesterday.

Annual inflation in Africa’s most populous country accelerated in September for the first time in three months, reaching 32.70 per cent, spurred by higher food and energy costs, the report said.

Price pressures have been exacerbated by the government’s decision to scrap petrol and electricity subsidies and to devalue the naira twice since President Bola Tinubu took over last year.

Cardoso told the FT Africa Summit in London that while he expected headline inflation to moderate in the coming months, food inflation was “proving stickier”. But the bank was working closely with the government to address this, he said.

Nigeria must not slacken in its reform drive as it is beginning to attract “growing and serious interest” from foreign investors, Cardoso said, citing recent visits to the country by Citigroup CEO Jane Fraser and JPMorgan’s Jamie Dimon.

“There’s an enormous amount of interest now, recognising the fact that the Nigerian currency is relatively moderated and has made our economy a lot more competitive,” he added.

The naira is worth only a quarter of its value when Tinubu took office, while fuel prices are five times higher.

Cardoso said measures introduced by the central bank to restore investor confidence were working and that there were now “minimal” complaints about lack of access to foreign exchange compared to “before, when only a handful of people could get it”.

“Now, the market is a lot deeper… and it (forex) is available,” he told Reuters.
Gross foreign exchange reserves now stand above $40 billion, and Cardoso said the central bank would share details about the net reserves regularly from early 2025 in the interests of greater transparency.

Cardoso said economic growth might remain moderate next year, in line with a World Bank estimate for 2025 of around 3.6 per cent, up slightly from an expected 3.3 per cent this year.

He pointed out that: “With the reforms that are being taken right now, it will put Nigeria in a far better position to see the increase on the growth side.”

Meanwhile, the Nigeria Export Processing Zone Authority (NEPZA) and operators of the country’s Free Trade Zones (FTZs) have called on the Central Bank of Nigeria (CBN) to quicken the process for granting approval for the operation of offshore banking across the zones to further aid the ease of doing business among others.

They told THISDAY that the offshore banking model, which is popular in other parts of the world, will help resolve current difficulties their businesses face in accessing foreign exchange in the country.

Specifically, they said the initiative would further ease pressure of the Naira.
The stakeholders in the FTZs also maintained that offshore banking would provide businesses with a more stable financial environment to thrive.

They made their desires known when NEPZA embarked on a media tour to some of the zones in Lagos, with a view to ascertaining their state of operation, providing visibility and their challenges as well as allow journalists to assess the level of investments in the zones.

Speaking during a visit to the Lagos Free Zone (LFZ), the Zone Administrator, NEPZA, Mr. Garba Hayatu, called on the central bank to address grey areas that had slow down the process of approving the take-off of offshore banking to attract more investments and boost the development of the zones.

Hayatu said, “Currently, Free Zones in Nigeria cannot access forex directly from the Central Bank of Nigeria. Offshore banking can solve this problem.
“Operators in the Free Zone are often affected by currency volatility, and the inability to access dollars directly adds to their challenges.

“Offshore banking would provide businesses with a more stable financial environment.”

He pointed out that there had been ongoing discussions with CBN, and hoped the knotty issues would be resolved as soon as possible, adding that its actualisation would mean a “major win for free zone operators”.
Similarly, operators of the Lekki Free Zone Development Company (LFZDC), said currency fluctuation had made it harder for Nigerian investors to buy land for investment as the former is priced in dollars.

Deputy Manageing Director of LFZDC, Mrs. Bolatilo Ajibode, while also supporting the operation of offshore banking in the zones, said, “With the current exchange rate, it’s tough for many”, adding however, that “we have flexible payment options to ease the burden”.

THISDAY further gathered that the notion of offshore banking has increasingly gained popularity among the economic zones operators because of its ability to simplify banking transactions and increase access to foreign currency to facilitate business operations.

Often established in financial hubs or jurisdictions with favourable regulatory, tax, and privacy laws, offshore banks offer various benefits including asset protection, currency diversification, tax efficiency, and confidentiality.

FTZs are designated areas with favourable trade regulations aimed at promoting international trade, manufacturing, and foreign investment, and offshore banking model remains critical in the zones to boost ease of international transactions.

It also enhances access to financing and investment as well as provide a secure place to hold assets, protecting them from domestic financial risks or regulatory actions.

Essentially, offshore banking in FTZs helps businesses optimise their operations, streamline financial management, and maximise profitability while benefiting from a flexible and globalised financial environment.