The Central Bank of Nigeria (CBN) has expressed satisfaction with the strides made in stabilizing the naira as excessive volatility appears to be subsiding.

Speaking in an interview with Bloomberg TV on Tuesday, CBN Governor Olayemi Cardoso said the measures taken by the bank to support the currency will revitalize investor confidence.

“I do believe that we have more or less seen the worst in terms of volatility,” Cardoso stated. “We are also very alive to observing the way and manner in which that market operates and ensuring that it gives the best value that can be accomplished using certain tools.”

Since taking office in September, Cardoso has overseen significant policy changes, including an increase in interest rates by 750 basis points to 26.25% and an overhaul of Nigeria’s exchange rate policies, effectively devaluing the naira.

These actions, alongside clearing a foreign-exchange backlog, have contributed to a more stable naira, even though it remains the world’s worst-performing currency this year, following the Lebanese pound.

“Reviving confidence in the naira is crucial for attracting investors to Nigeria,” Cardoso emphasized. “Our thoughts align with those of the governor,” added Olumide Sole, an analyst at Lagos-based Vetiva Capital Management Ltd. “Based on the purchasing power parity model, the naira is currently valued at 900 naira levels, which is far less than the current market price.”

The naira has traded in a narrow range between 1,473 and 1,490 per dollar this month, closing at 1,492.71 to the dollar on Tuesday.

“We’re relatively pleased with where we are,” Cardoso said, noting that while significant progress has been made, the central bank’s work is ongoing. “It’s continuous work in progress. And we will do everything possible to ensure that we continue to manage the macroeconomic fundamentals that affect that.”

The CBN’s efforts have also impacted Nigeria’s inflation rate, which has remained high due to the currency devaluation, food insecurity, and the removal of energy subsidies.

Last month, consumer prices rose by 34%, slightly up from 33.7% in April, indicating that inflation might be nearing its peak.

The governor declined to speculate on whether these developments signal an end to the tightening cycle that began in May 2022.

“Data will direct whether they see further hikes or not,” he said. “The MPC has been very clear in stating that they see inflation as a major impediment for the future of Nigeria, and they will do everything possible to ensure that they keep inflation in check.”

Cardoso also mentioned the importance of using orthodox monetary policy to achieve these goals. The steps taken by the CBN, coupled with fiscal reforms by President Bola Tinubu’s administration, have improved Nigeria’s liquidity.

The World Bank recently approved $2.25 billion in funding to support Nigeria’s economic reforms, boosting its foreign exchange reserves.

The CBN will continue to support measures to build the country’s reserves, including a potential eurobond issue.

“We should have a diversity of sources,” Cardoso said. “It shouldn’t just be the eurobond market, it shouldn’t just be foreign portfolio investors, it should be a hodgepodge of different things.”

Building these reserves is crucial for the CBN to meet demand in the foreign-exchange market and sustain the gains made in stabilizing the naira, Sole remarked.

The Debt Management Office (DMO) of Nigeria has announced that the country’s total public debt has risen to ₦121.67 trillion ($91.46 billion) as of March 31, 2024.

This represents an increase of ₦24.33 trillion from the ₦97.34 trillion ($108.23 billion) recorded at the end of December 2023.

The surge in debt is attributed to both domestic and external borrowings by the Federal Government, the 36 state governments, and the Federal Capital Territory (FCT).

The DMO’s report reveals that Nigeria’s domestic debt now stands at ₦65.65 trillion ($46.29 billion), while the external debt is ₦56.02 trillion ($42.12 billion).

The DMO noted that the rapid increase in public debt is largely due to new borrowing to partially finance the 2024 Budget deficit and the securitization of a portion of the ₦7.3 trillion Ways and Means Advances at the Central Bank of Nigeria (CBN).

“The increase was from new borrowing to part-finance the 2024 Budget deficit and securitization of a portion of the ₦7.3 trillion Ways and Means Advances at the Central Bank of Nigeria,” the DMO stated.

Despite the rising debt, the DMO remains optimistic about future debt sustainability, contingent on improvements in government revenue.

“Whilst borrowing, as provided in the 2024 Appropriation Act, will continue, we expect improvements in the Government’s Revenue to enhance debt sustainability,” the DMO added.

The increase in debt comes at a time when President Bola Tinubu is preparing to present the 2024 Supplementary Budget to the National Assembly.

This follows the President’s approval of the ₦28.7 trillion 2024 Appropriation Bill on January 1, 2024, which was ₦1.2 trillion higher than the budget originally proposed in November 2023.

The 2024 budget, dubbed the “Budget of Renewed Hope,” set ambitious targets, including pegging the oil price at $77.96 per barrel and estimating daily oil production at 1.78 million barrels.

However, the naira has faced severe depreciation, plunging to nearly ₦2,000/$1 in February, before stabilizing around ₦1,500/$1.

Economic analysts warn that the escalating debt and currency depreciation could pose significant challenges to Nigeria’s economic stability.

The government’s ability to manage its borrowing and stimulate revenue generation will be critical in navigating these fiscal pressures.

As Nigeria grapples with these economic realities, the focus remains on finding sustainable solutions to manage the growing debt burden while fostering economic growth and stability.

The Federal High Court in Lagos has scheduled June 27, 2024, for the next hearing in the ongoing contempt suit filed by Guaranty Trust Bank Plc (GTB) against directors of AFEX Exchange Commodities Limited.

The case revolves around a disputed N17.81 billion loan obtained under the Central Bank of Nigeria’s Anchor Borrowers’ Programme.

Presiding over the court, Justice Chukwujekwu Aneke set the date following a session where arguments were presented by the plaintiff’s lead counsel, Mr. Ade Adedeji (SAN), and the respondent’s counsel, Prof. Olawoyin (SAN).

The core issue pertains to the alleged disobedience of a court order by the directors of AFEX Exchange Commodities Limited.

GTB, through its counsel Ajibola Aribisala (SAN), has accused AFEX and its directors—Ayodele Balogun, Jendayi Fraaser, Justin Topilow, Mobolaji Adeoye, and Koonal Ghandi—of contempt for failing to comply with a court directive.

The bank alleges that these directors did not appear in court as mandated, which led to the initiation of contempt proceedings.

During the latest session, Adedeji emphasized the necessity for the directors to appear in person, stating, “My lord, the parties in contempt are not in court. The contemnors cannot sit in the comfort of their homes and send a lawyer to court in contempt proceedings. The law is trite that they must appear before the court.”

In response, Olawoyin argued that he had only recently been briefed on the matter and was not fully aware of the prior developments.

He noted that some of the individuals listed as directors were no longer with the company, adding that one current director, Mr. Akinyinka, was present in court, while another was on pilgrimage.

The contempt case traces back to a suit marked FHC/L/CS/911/2024, where GTB sought to recover the loan amount through legal measures.

On May 27, Justice Aneke granted an interim Global Standing Instruction (GSI) injunction, which directs over 20 banks to transfer funds credited to AFEX into its account with GTB until the debt is settled.

Also, the court authorized GTB to take possession of AFEX’s 16 warehouses across seven states and sell the commodities stored within, as these were procured using the CBN’s loan facility.

The N17.81 billion loan comprises N15.77 billion in principal and interest outstanding as of April 17, 2024, and an additional N2.04 billion covering recovery costs and incidental expenses.

As the court prepares for the next hearing, the financial and legal communities are closely watching the proceedings.

The outcome will significantly impact not only the involved parties but also set a precedent for handling similar cases in the future.