November 1, (THEWILL) – In September 2023, shortly after Olayemi Cardoso was nominated aGovernor of the Central Bank of Nigeria (CBN), I asked a seemingly simple question in an article: should a central bank governor be an economist or a banker?
Nigeria’s economy provided good reason for asking. Inflation was approaching 26 percent, foreign exchange shortages were hurting businesses, external reserves stood around $33 billion, multiple exchange rates distorted price discovery, and the CBN had accumulated significant quasi-fiscal responsibilities.
Three years later, Cardoso’s performance offers an opportunity to revisit that question. My earlier article highlighted Dr Clem Isong and Professor Chukwuma Soludo, both trained economists, to illustrate the importance of macroeconomic expertise. Yet Cardoso, primarily a banker by professional background, has implemented several policies consistent with economic orthodoxy.
Perhaps the distinction was never simply between economists and bankers, but between commercial banking and central banking. While commercial bankers focus on lending, profitability and financial risk, central bankers must manage inflation, liquidity, exchange rates, financial stability and expectations across an entire economy.
Cardoso inherited an institution whose responsibilities had become increasingly blurred. The CBN had expanded into agricultural and manufacturing interventions while financing substantial government deficits through Ways and Means advances. Foreign-exchange markets were fragmented and institutional credibility had weakened.
One significant development has been the attempt to restore the CBN’s core mandate. Ways and Means financing reportedly declined from approximately N26.95 trillion in 2023 to N2.84 trillion by January 2026. Subject to comparable accounting definitions, this suggests progress towards restoring the boundary between fiscal and monetary policy.
Foreign exchange provides another important test. Cardoso inherited billions of dollars in unmet obligations. The CBN subsequently cleared the valid portion of an estimated $7 billion backlog and moved towards a more market-determined exchange-rate system.
The transition was painful. The naira depreciated substantially, businesses carrying dollar liabilities suffered losses, and households experienced imported inflation. However, judging the reforms solely by currency depreciation ignores the distortions that preceded them.
By 2026, foreign-exchange conditions had become more stable, the gap between official and parallel-market rates had narrowed, and external reserves had strengthened
The distinction between the level of an exchange rate and its stability is important. Businesses need not only a favourable exchange rate but also liquidity, predictability and reliable access to foreign currency.
Inflation presents a more complicated assessment. Cardoso’s CBN pursued aggressive monetary tightening, raising the Monetary Policy Rate to 27 percent before gradually reducing it to 23 percent by September 2026. Headline inflation subsequently moderated to 14.63 percent in September.
The CBN deserves some credit through tighter liquidity management, improved exchange-rate stability and reduced monetary financing. However, food supply, energy costs and fiscal policy also influence inflation. Furthermore, lower inflation does not mean falling prices. Nigerians continue to experience the cumulative cost-of-living increases of previous years.
The economic costs of monetary tightening also deserve scrutiny. Elevated borrowing costs and substantial reserve requirements constrain credit availability, potentially discouraging investment by manufacturers and small businesses. The challenge is determining whether the benefits of stabilisation outweigh the consequences for productive investment, employment and economic growth.
Nigeria’s economy expanded by 3.87 percent in 2025 and accelerated to 4.43 percent year-on year in the second quarter of 2026. This represents progress, but growth of around four percent remains insufficient for Nigeria’s rapidly expanding population and development needs. Macroeconomic stabilisation is the foundation of prosperity; it is not prosperity itself.
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Bank recapitalisation represents another consequential intervention
The CBN raised minimum capital requirements to N500 billion for international commercial banks, N200 billion for national banks and N50 billion for regional banks. By March 2026, banks had reportedly raised N4.65 trillion, with 72.55 percent sourced domestically, while 33 banks met the revised requirements.
Stronger banks should improve financial resilience and their capacity to finance investment. However, the real test is whether additional capital supports productive private-sector lending rather than primarily government securities and banking-sector profitability.
International markets have recognised Nigeria’s improving economic position. In August 2026, Moody’s revised the country’s sovereign outlook from stable to positive, citing stronger external resilience and economic growth, although fiscal and debt-affordability challenges remain.
Nevertheless, attributing these improvements entirely to monetary policy would be misleading. Fiscal reforms, external conditions and domestic economic developments have also contributed.
So, should a central bank governor be an economist or a banker? Three years after posing that question, my assessment is more nuanced.
An economist may bring stronger macroeconomic foundations, while a banker may offer deeper practical knowledge of financial markets and institutional risks. Cardoso’s tenure suggests that neither background alone guarantees effective central banking. What matters is the ability to combine economic judgement, financial expertise and institutional discipline.
His record provides evidence of progress towards greater monetary credibility, improved foreign-exchange market functioning and stronger banking-sector resilience. Yet these achievements must be weighed against the costs of restrictive monetary policy and the challenge of translating stability into productive investment and rising living standards.
Ultimately, Nigeria requires neither exclusively an economist nor exclusively a banker, but a competent central banker. And the final measure of Cardoso’s tenure will not be how successfully he stabilised an economy in crisis. It will be whether that stability eventually becomes prosperity.
By Mayowa Oyatogun
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Oyatogun is a Strategy & Business Planning Specialist based in United Kingdom
