The Central Bank of Nigeria (CBN) is implementing a comprehensive overhaul of its regulatory framework to enhance stability and transparency in Nigeria’s financial sector.
This marks a pivotal moment for the country’s banking system, as the CBN intensifies its focus on efficient oversight, regulatory compliance, and the management of emerging risks.
The latest reforms by the apex bank include expanding supervisory responsibilities and introducing new compliance measures for banks, Payment Service Banks (PSBs), and other financial institutions (OFIs). This initiative is aimed at consolidating the effectiveness of regulatory practices, ensuring robust monitoring of non-prudential risks, and maintaining financial stability across the industry.
The reforms also set clearer institutional roles within the financial ecosystem, laying a foundation for sustainable growth and minimizing risks.
A core element of the CBN’s mandate is to maintain a secure financial environment. The Bank and Other Financial Institutions Act (BOFIA) of 2020 authorizes the CBN to manage the payments system and ensure operational efficiency in the banking sector. As part of its commitment, the CBN has increased the scope of its oversight, going beyond traditional banking activities to focus on a broader spectrum of financial services.
The recent establishment of a new Compliance Department is central to these changes. This department, inaugurated in early 2025, has been tasked with overseeing various critical areas including financial crime supervision, market conduct, enterprise security, corporate governance, and Environmental, Social, and Governance (ESG) practices. Through this reorganization, the CBN seeks to integrate a rigorous compliance structure within the supervisory frameworks to fortify the industry against emerging financial threats and sustain investor confidence.
Under the stewardship of CBN Governor Olayemi Cardoso, the focus has been on reinforcing the financial infrastructure with transparent practices. Governor Cardoso has emphasized the need for greater ethics and professionalism in market operations, evident in the introduction of the Foreign Exchange (FX) Global Code, which holds authorized dealers and participants accountable to international standards of transparency.
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“Ethics and professionalism are no longer negotiable,” Governor Cardoso asserted. “We will ensure a market founded on transparency and accountability, with zero tolerance for malpractices.”
In a bold move, the CBN has also enhanced its role in fostering economic stability through policies targeting key sectors such as agriculture, industry, and finance. Reforms aimed at stabilizing the exchange rate, curbing inflation, and improving banks’ capital buffers are part of this strategic approach to drive long-term economic recovery.
One of the CBN’s key initiatives includes empowering Micro, Small, and Medium Enterprises (MSMEs) through increased access to credit. This is being achieved by strengthening the financial infrastructure for Primary Mortgage Banks (PMBs) and Microfinance Banks (MFBs), enabling them to provide more robust lending options to underserved businesses and individuals. As part of this, the CBN is working to integrate these banks into the Global Standing Instruction (GSI) platform to reduce non-performing loans and stimulate lending.
Governor Cardoso’s leadership has also extended to the development of the CBN’s 2024–2028 Strategy, which focuses on building a resilient financial system, enhancing governance, and advising the federal government on economic policies. This strategy, titled Repositioning for Impact, underlines the need for coordination between monetary and fiscal policies, as well as the CBN’s commitment to fostering a transparent, efficient financial environment for all Nigerians.
“We must work together to rebuild trust and ensure that the financial sector is not only stable but also growing,” Governor Cardoso remarked at the launch of the CBN’s new strategic plan. “This is not just the CBN’s strategy; it is a strategy for every Nigerian.”
Furthermore, the CBN’s efforts in improving Nigeria’s foreign exchange market are yielding results. The Nigerian Autonomous Foreign Exchange Market saw a 226 percent increase in average daily turnover in the first half of 2025, compared to the previous year. Additionally, foreign portfolio inflows surged by 72 percent during the same period, highlighting investor confidence in the Nigerian economy.
With these changes, the CBN remains committed to overseeing a stable banking environment. Key indicators such as the non-performing loan ratio, which remains below the 5 percent prudential benchmark, and the liquidity ratio, which exceeds 30 percent, demonstrate that the sector is well-capitalized to handle operational and customer needs. Stress tests have also reaffirmed the resilience of the banking sector, ensuring continued depositor confidence.
