E-Financial
Bloomberg: Nigerian Economic Policy Dispute Hinders Chances of Recovery
A dispute between Nigeria’s monetary and fiscal policy makers over how to lift the economy out of its worst slump in more than two decades may delay a recovery in Africa’s most populous country, Bloomberg said in a report.
Godwin Emefiele, Central bank Governor, in earlier in this month ignored calls by Finance Minister Kemi Adeosun to cut borrowing costs and kept the key interest rate unchanged at 14 percent, hours after she said in a television interview looser policy is necessary to stimulate the economy.
Emefiele also called out the government for its inadequate efforts to boost growth, saying monetary policy alone can’t get the economy out of stagflation and that “complementary fiscal policies” are needed to resuscitate output and consumption. GDP contracted in the first half of the year as the effects of a 15-month currency peg, fuel and power shortages and lower oil prices and production weighed on output.
The economy is forecast to shrink this year for the first time since 1991.
The delayed approval of a 6.1 trillion-naira ($19.3 billion) budget has stalled the government’s efforts to stimulate economic activity and the naira’ s slump since the removal of the 197-199 per dollar peg on June 20 has fueled inflation to the highest in more than a decade, extending the decline in consumer spending.
“The problem is that neither the government nor the Central Bank have a ‘grand strategy’ to fix Nigeria’s economic woes,” Malte Liewerscheidt, an Africa analyst at consultant VeriskMaplecroft, said in an e-mailed response to questions. “What we have seen over the past 18 months are mostly short-sighted tactical responses to ever more pressing problems.”
Inflation at 17.6 percent and a currency that weakened about 40 percent against the dollar since June, coupled with an economy forecast by the IMF to contract by 1.8 percent, underline the policy dilemma.
Adeosun said the nature of inflation is not being driven by consumer demand as it is “cost-push” and won’t respond to interest-rate increases, while Emefiele said the tightening stance has helped to lure more than $1 billion in net portfolio inflows. Cheaper borrowing would fuel demand for goods the economy can’t produce due to a lack of action to boost industrial output and increase price growth, he said.
This sort of divergence between fiscal and monetary authorities “tend to be pronounced when there are no clear best options available to policy makers,” Manji Cheto, senior vice president at Teneo Intelligence in London, said by email.
“Ultimately, the fiscal authority will have to realize that the heavy lifting will have to come from its own end.” The difference in policy approaches between the government and the central bank is not new.
President Muhammadu Buhari opposed the devaluation of the naira for more than a year, saying it would fuel inflation and hurt ordinary Nigerians. A shortage of foreign currency which led to rapid price growth and a slump in output eventually forced the central bank to move to a free float.
Lowering the monetary policy rate “will further fuel inflation and you will reduce the yield on fixed income at a time you want to attract foreign exchange,” former central bank Governor Muhammadu Sanusi II said in a speech on Sept. 21.
“The immediate oxygen that this economy needs is foreign exchange coming into the economy and foreign investors are responsible for that.”
The government will spend its way out of a recession, Adeosun said in an interview with broadcaster CNBC Africa on Sept. 19. Half of the planned 1.9 trillion naira of debt to help fund the fiscal gap, which widened by 30 percent this year, would come from the domestic debt market and the remainder from external sources, according to budget documents.
Higher borrowing costs and the loss of almost half of the revenue projected for this year could push Nigeria’s debt service-to-revenue ratio above the projected 35 percent of GDP, according to documents from the budget and national planning ministry. The nation will finalize a $1 billion loan from the African Development Bank next month and may borrow more than $4 billion over the next two years to shore up its budget, according to the lender.
“The misalignment between monetary and fiscal policy will remain in the short term,” Pabina Yinkere, Lagos-based head of research at Vetiva Capital Management Ltd., said by phone. “By March, when inflationary pressures reduce, the Central Bank will have room to reduce interest rates and we will see monetary and fiscal policy get aligned.”
Central Bank of Nigeria (CBN) has suspended dividend payments to shareholders and bonuses to directors and senior management staff of banks currently benefiting from regulatory forbearance.
Forbearance refers to the temporary reduction or postponement of payments, such as for loans or mortgages, usually introduced to give temporary relief to individuals, and corporations, including financial institutions encumbered by financial straits.
The directive was contained in a circular dated June 13, signed by Olubukola Akinwunmi, director of Banking Supervision, CBN.
According to the CBN, the move is part of efforts to strengthen capital buffers, enhance balance sheet resilience and promote prudent internal capital retention within the banking sector during what it described as a transitional period.
The regulatory forbearance arrangement, which allows banks some relief in meeting credit exposure and Single Obligor Limit (SOL) requirements, is currently being reviewed by the central bank in terms of capital positions and provisioning adequacy.
As part of this review, the CBN directed affected banks to suspend dividend payments, defer bonuses, and refrain from making investments in foreign subsidiaries or launching new offshore ventures.
“This temporary suspension is until such a time as the regulatory forbearance is fully exited and the banks’ capital adequacy and provisioning levels are independently verified to be fully compliant with prevailing standards,” the CBN said.
The bank added that the measure is to ensure that internal resources are retained to meet existing and future obligations and support “the orderly restoration of sound prudential positions.”
The CBN also said it will continue to monitor developments and engage with institutions as necessary.
The move comes amid efforts to tighten supervision across the financial system following recent banking sector reforms and recapitalisation directives.
Kevin Ugwuoke, Executive Director and Chief Risk Officer of Fidelity Bank Plc, has formally assumed office as President of the Chartered Risk Management Institute of Nigeria (CRMI).
L-R: Registrar/Chief Executive, Chartered Risk Management Institute of Nigeria (CRMI), Victor Olannye; Divisional Head, Risk Management Securities and Exchange Commission (SEC), Grace Abioye; Immediate Past President, CRMI, Ezekiel Oseni; President, CRMI and Executive Director/Chief Risk Officer, Fidelity Bank Plc, Kevin Ugwuoke; Director, Enterprise Risk Management, Nigeria Deposit Insurance Corporation (NDIC), Amal Haruna; and Rep. Keynote speaker, Deputy Group Management Director, United Bank of Africa (UBA), Chukwuma Nweke; at the CRMI Conferment Handover/Sent-Forth ceremony, held in Lagos recently.
His leadership promises a reform-focused era anchored on policy advocacy, ethical standards, and digital innovation to deepen risk governance across sectors in the country.
Speaking during the presidential handover ceremony in Lagos over the weekend, Ugwuoke — who also doubles as acting President of the Federation of African Risk Management Associations (FARMA) — described his election as “a call to action.”
He pledged to reposition CRMI as a thought leader and institutional partner in shaping the future of risk management in Nigeria’s national development.
“Our mission is more than just certification; it’s about strengthening the culture of risk governance across sectors. We will collaborate with regulators, raise awareness, and provide practical tools to help organizations embed risk discipline at all levels.”
Ugwuoke outlined a five-pronged strategy to guide his administration: strengthening professional education and certification; deepening policy and regulatory engagement; accelerating digital transformation; integrating ESG and climate risk into corporate strategies; and mentoring the next generation of risk practitioners.
He explained that CRMI will align its initiatives with key policy institutions — including the Nigerian Economic Summit Group, the National Assembly, and sub-national governments — to help embed robust risk frameworks into economic development plans.
“We must integrate risk thinking into how we plan, govern, and invest. We will advocate for more inclusive regulations to empower small and medium enterprises, improve macroeconomic stability, and foster institutional resilience.”
Ugwuoke also announced plans to revise the Institute’s curriculum, introduce specialized certifications to reflect emerging risks, and implement a new National Risk Observatory to provide real-time risk data to both the public and private sectors.
“Digital innovation will be central to how CRMI operates going forward. We are automating our backend, delivering more virtual training, and employing technology to scale our impact across the country and beyond.”
In his remarks, the outgoing President of CRMI, Ezekiel Oseni, challenged the new leadership to consolidate on the achievements made under his tenure — from securing chartered status and strengthening partnerships to gaining greater international recognition — and take the Institute to the next level.
Also speaking on the occasion, Chukwuma Nweke, deputy managing director of United Bank for Africa (UBA), delivering a goodwill message on behalf of Group Managing Director, Oliver Alawuba, described Ugwuoke as a worthy successor.
“As Professor Oseni hands over the baton to Kevin Ugwuoke — a well-respected leader in the risk management ecosystem — we are assured CRMI is poised for greater achievements under his watch.”
Nweke stressed that growing economic uncertainties — from inflation and exchange rate volatility to growing debt — underscore the need for a more strategic view of risk. “Risk must be recognized not as a compliance obligation or a cost center but as a key enabler of resiliency and growth. Institutions that embed risk into their strategies will absorb shocks more effectively, unlock value, and inspire investor confidence.”
As part of the day’s ceremonies, 11 distinguished practitioners were conferred with the Fellow of Chartered Risk Manager (FCRMI) award, while 21 new members were formally inducted as Chartered Risk Managers (CRM). Furthermore, a new Governing Council was inaugurated to oversee the affairs of the Institute for the 2025–2027 term, marking a decisive step forward in institutional renewal and policy direction.
Sterling Bank has launched a ₦2 billion scholarship initiative to support Nigerian students in private universities. The program, Beyond Education, was unveiled on Democracy Day and aims to remove financial barriers to higher learning.
The bank will fully sponsor 600 students from across Nigeria’s 36 states and the FCT to study Technology, Finance, Sales, and Public Health at Miva University, founded by Sim Shagaya. The selection process is merit-based, with candidates nominated by themselves or others, and final selection determined through public voting open to Sterling account holders.
Sterling Bank’s CEO, Abubakar Suleiman, described the initiative as an investment in Nigeria’s future, aligning with the bank’s commitment to Health, Education, Agriculture, Renewable Energy, and Transportation. The bank has already deployed over half a trillion naira in financing across these sectors.
According to Obinna Ukachukwu, Growth Executive at Sterling Bank, the program is about creating opportunities beyond education. The bank is shifting from short-term philanthropy to long-term ecosystem development, with investments in digitized healthcare, school financing, agricultural cooperatives, solar energy, and transport systems.
“Nigeria’s progress requires action,” Suleiman said. “We are funding the future architects of the country—those who will build the businesses, institutions, and innovations needed for national prosperity.”
Nominations for the Beyond Education scholarships are now open at www.sterling.ng/FUTURE. The initiative sets a precedent for private-sector-driven education investment, where success is measured not just in profit, but in people empowered.
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