As Nigeria closed the chapter on 2025, the Central Bank of Nigeria (CBN) emerges as the institution that quietly rebuilt the foundations of the country’s financial system. It was a year of tough adjustments, structural reforms, and renewed economic discipline. While the social cost of reform was heavy, 2025 will likely be remembered as the year Nigeria began restoring credibility to its monetary framework.

At the start of the year, Nigeria’s financial system was still recovering from years of distortion. Multiple exchange rates, opaque interventions, and regulatory forbearance had eroded investor confidence. The FX market was dysfunctional, inflation remained high, and banks were overly reliant on government securities rather than productive lending. Against this backdrop, the CBN shifted deliberately from discretionary interventions to a rules-based approach to monetary management.


FX Market Liberalisation and Investor Confidence

One of the most significant reforms of 2025 was the continued liberalisation of the foreign exchange market. Contrary to expectations, capital inflows recovered faster than anticipated. Portfolio investments returned, remittances improved, and exporters converted more of their foreign earnings into naira.

By relying on market-driven price signals rather than administrative controls, the FX market regained functionality. Authorities described this as a long-missing “shock absorber” — an exchange rate system capable of adjusting to external shocks without triggering a crisis.


Perhaps most notably, Nigeria achieved macroeconomic adjustment without a large-scale IMF bailout. By allowing the naira to find its market equilibrium, policymakers restored transparency and predictability to FX pricing, even as public pressure mounted.

Interest Rates, Inflation, and SME Challenges

Tight monetary policy defined 2025. High interest rates helped anchor inflation expectations and stabilise the naira. While this strengthened financial system stability, it made borrowing more expensive. Small and medium-sized enterprises (SMEs) faced constrained access to credit, and banks increasingly favoured low-risk government instruments over long-term private sector lending.


*The result:* a safer but slower financial system, highlighting the trade-off between stability and growth

Banking Sector Reforms

Banking reforms were another cornerstone of the year’s transformation. The CBN enforced recapitalisation, strengthened supervision, and reversed years of regulatory leniency. These measures improved resilience, reduced systemic risk, and ensured banks could withstand shocks during a period of elevated interest rates and FX volatility. Without these reforms, the financial system would have faced far greater instability.


One of the quieter but most profound developments in 2025 was the changing structure of Nigeria’s foreign exchange inflows. Oil now accounts for less than 20% of FX flows, with non-oil exports, remittances, and diversified trade filling the gap. Cocoa exports, creative services, manufacturing, and cross-border informal trade recorded strong growth, aided by a more competitive exchange rate.

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This marks a fundamental shift in Nigeria’s economic narrative — from oil dependence to diversified FX generation.


Structural Challenges

Despite progress, inflation remained sticky, reflecting structural constraints. High energy costs, insecurity, logistics bottlenecks, and import dependence weakened the impact of tight monetary policy. Households faced declining purchasing power, businesses delayed expansion, and government debt service costs rose.

The lesson of 2025 is clear: monetary stability alone cannot drive growth without deeper structural reforms.


Restoring Credibility and Confidence

The year also restored institutional credibility. Remittance flows strengthened, domestic dollar conversions increased, and monthly FX turnover rose sharply — quiet indicators that confidence was returning. The financial system became more predictable, less speculative, and more rules-driven.

Looking Ahead:


The challenge for 2026 is no longer stabilisation but transmission — turning monetary stability into real economic expansion. Achieving this will require coordinated fiscal discipline, targeted development finance, infrastructure investment, and improvements in security to unlock manufacturing, agriculture, and housing finance.

2025 may not be remembered as a recovery year, but as a foundation year. The CBN chose discipline over convenience, credibility over shortcuts, and long-term stability over short-term relief. The Central Bank did not fix the economy, but it rebuilt the bones of the financial system — and that may prove to be its most important legacy.

Ayobami Oyalowo is The Executive Director, Finance and Administration at Ogun-Oshun River Basin Authority