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Cardoso’s last card

Cardoso’s last card
April 09
12:08 2024

On March 21, 2024, I made a post on X (formerly Twitter), saying it was a good time to give Olayemi Cardoso, the governor of the Central Bank of Nigeria (CBN), his flowers for the work he was doing with the Nigerian economy. 

I got a few comments asking me what he had done. For one, I said he had cleared the foreign exchange backlog, which was estimated to the tune of $7 billion. One of the commenters said I was illiterate, another said the CBN had not paid airlines who had money stuck in Nigeria. Yet another said I had been paid to make the tweet. As long as I remember, I have never been paid to make a tweet.

The background to my post was from a few weeks earlier when I used money supply to calculate the real value of the naira. The conclusions I came to were dire, given the state of our foreign reserves. I quickly aligned myself with previous calculations which put the value of the naira anywhere between 1230 and 2340 per dollar. It felt like we needed a miracle worth close to $30 billion to be out of the trenches. But here was Cardoso slinging his policy hammer to bolster the local currency.

In October 2023, when the naira hit 1,200 to the dollar, I got lots of questions asking if the naira would ever return to 700 per dollar. After a simple historical analysis, the answer was no. My conclusion at the time was that “the data saves; it’s the hope that kills. What the data is saying is that N700 per dollar may be gone for the foreseeable future.”


I projected that the best we would see would be between 840 and 960 to the dollar — based on historical trends, and a suite of similar policies. If you asked me the same question today, I may have a slightly varied answer for you.


When Cardoso was appointed the CBN governor in September 2023, the naira was nowhere near 1,800 to the dollar. So one of the familiar arguments is that Cardoso took the naira to 1800, and is now pretending to bring it back to 1,000 for some applause.

There might be some credit there. For all his failings, Godwin Emefiele, the former governor of CBN, never let the naira cross N1,000. Anytime the naira went anywhere close to 1,000 per dollar, Emefiele’s CBN would intervene in the FX market and ensure the local currency appreciated.


Cardoso did not do that. He let the naira take heavy hits, going as high as 1,850 as Nigerians faced immense pain and pressure from an increased cost of living. For the first time in 52 years, we started having real conversations about the dollar at N2,000.

I believe in the buck stopping at the biggest table, so yes, hand Cardoso some buck for letting speculators take the naira that far before finding the rhythm to begin a recovery. While I do not support the argument that he caused the naira crash, I see the point those pushing it are legitimately able to make.

However, I — like most Nigerians — am more interested in the recovery. Due to the gradual nature of the recovery, we may not necessarily appreciate it, but it’s the best recovery the naira has ever made. Before now, naira’s best recovery was the 30.8% recovery made in 2017.  From 1,800 to 1,100 is nearly a 45% recovery in such a short time.


The CBN governor has taken many policy steps to get us here. But we need to remember that no matter how good this feels, it is not yet Uhuru. When this government came on board, the naira was trading at 740 to the dollar at the parallel market. Going back there should be the eventual goal.


While this is a little unrealistic, it is looking less impossible.

Every time speculators have thought Cardoso has played his last card, “the headmaster”, as President Tinubu calls him, shows up with yet another card. And I do not care how many more cards he has to play, all my care is that his last card must be “sustainability”.

Recovery will do more harm than good if we do not sustain it. As the naira hit 1,100 to the dollar, the same speculators, whose cosmetic power we are trying to break, are in the market for more dollars. If we lose this recovery, they will feast heavy on the weakness of the naira and policies.

Cardoso’s last card must be sustainability.


You can reach Mayowa on Twitter @OluwamayowaTJ


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