The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has urged for an immediate increase in oil production and a comprehensive economic diversification strategy to stabilize the country’s fluctuating exchange rate.
He made this statement on Tuesday after a two-day Monetary Policy Committee (MPC) meeting in Abuja.
Cardoso stressed that although initiatives aimed at enhancing foreign exchange inflows, such as liberalizing diaspora remittances, have shown potential, they cannot replace the need to tackle the underlying structural challenges within the Nigerian economy.
“We must recognise that without resolving the underlying economic fundamentals, we will continue to sub-optimise.
“Oil production must be ramped up to levels that can support the economy, and we need to diversify beyond our current status as a monolithic economy reliant on oil. Until this happens, the strong exchange rate we all desire will remain out of reach,” he said.
The governor underscored the challenges Nigeria faces as an oil-dependent nation, emphasizing that fluctuations in global oil prices and production make the economy highly vulnerable.
He stressed the need for increased investment in non-oil exports and encouraged Nigerians to adopt a more sustainable approach by reducing the country’s heavy reliance on imports.
Cardoso also highlighted the importance of import substitution as a critical area for growth, alongside recalibrating the national preference for foreign goods.
While the central bank has introduced measures to diversify foreign exchange sources, such as remittance inflows and innovative financial products, he noted that these efforts alone would not be enough to address the broader economic issues.
“The central bank is committed to ensuring that markets operate efficiently and will hold those who attempt to exploit the system, but this will not compensate for the broader need to fix the structural foundations of the economy,” he said.
According to the latest data from the Organisation of Petroleum Exporting Countries (OPEC), Nigeria’s average daily crude oil production increased by 3.4 percent in August, reaching 1.352 million barrels per day (bpd), an increase of 45,000 barrels from July’s 1.307 million bpd.
However, this figure still falls short of OPEC’s quota of 1.5 million bpd.
CBN Governor Olayemi Cardoso expressed optimism about the potential economic impact of the Dangote refinery.
He highlighted that petroleum products currently account for 10 to 15 percent of Nigeria’s total imports and stressed that the refinery’s full operation would significantly reduce the country’s dependence on foreign imports.
“To the extent that we can do away with that, I think that is a very, very good thing,” he said, describing it as a crucial step toward improving Nigeria’s balance of payments and overall economic health.
The CBN governor also stated that as Nigeria boosts its domestic refining capacity and increases oil production, the demand for imports would decrease, relieving pressure on the naira.
He expressed optimism that as the Dangote refinery scales up production and begins exporting refined products, the resulting foreign exchange earnings would contribute to stabilizing the naira and bolstering the central bank’s efforts to manage the exchange rate.
Additionally, he projected that the refinery’s ability to process up to 2 million barrels per day would not only cut import costs but also significantly enhance Nigeria’s export potential.
“As production ramps up and we get to 2 million barrels and over, the export side will kick in, and foreign exchange starts to come in,” he said.
He explained that this would have a substantial and lasting effect on strengthening the naira over the long term.
