The Central Bank of Nigeria (CBN) incurred a total of N3 trillion in liquidity management in 2024, as part of its ongoing efforts to curb inflationary pressures.
This is a particularly significant increase in the Bank’s expenses during the year stemmed from its liquidity management operations. The costs surged to N4.5 trillion, a sharp rise from N1.5 trillion recorded in 2023. This reflects that liquidity management costs the central bank N3 trillion in 2024.
This information was disclosed in the financial statements released by the apex bank on Friday. The statements reflect the CBN’s continued commitment to stabilising the economy through prudent policy implementation and strategic financial oversight. The 2024 financial outcomes highlight progress in several areas, including improvements in external reserves, enhanced asset quality, heightened cost efficiency, and a noticeable strengthening of the bank’s overall financial position.
The escalation correlates directly with the more aggressive monetary policy stance adopted throughout the year to counteract inflationary trends. To achieve this objective, the CBN conducted more frequent and larger-value Open Market Operations (OMO), aimed at absorbing excess liquidity that had been injected into the economy through various fiscal channels.
Although such operations come with substantial costs, it is important to note that this responsibility is carried out on behalf of the Federation. In several other jurisdictions, similar expenses are typically borne directly by the government rather than the central bank.
The financial statements further reveal a significant increase in the losses associated with settled derivative contracts, which rose from N6.3 trillion in 2023 to N13.9 trillion in 2024. This marked rise is attributed to the large volume of derivative contracts that the bank settled during the year. These transactions are legacy obligations that the current CBN management inherited upon assuming office.
The proactive decision to settle these contracts was a key component of the management’s broader strategy aimed at reducing outstanding foreign exchange liabilities. By doing so, the bank sought to lower its foreign exchange exposure, enhance Nigeria’s net foreign reserves, bolster the country’s external buffer, and improve investor confidence. This approach also aimed to restore credibility to Nigeria’s forward markets and to address long standing obligations with greater transparency.
Another development reflected in the financial statements is a notable decline in loans and receivables, which dropped from N16.1 trillion to N11.9 trillion. This reduction can be primarily attributed to substantial recoveries from earlier intervention lending programmes, coupled with a deliberate policy shift away from intervention-based lending and monetary financing through ways and means. This adjustment aligns with the CBN’s new position of allowing market mechanisms to play a more central role in driving credit allocation and fostering the development of the financial sector.
The management of operating expenses during 2024 also stands out, as they were effectively contained and optimised, showcasing the bank’s heightened focus on cost efficiency. This was achieved through targeted cost rationalisation measures that included curtailing non-essential expenditures and streamlining operations across its regional branches and various departments.
In parallel, Nigeria’s external reserves experienced an increase, rising from $36.6 billion in 2023 to $38.8 billion in 2024. The improvement is largely the result of increased inflows from portfolio investors, diaspora remittances, and Federal Government receipts, buoyed by growing confidence in the Nigerian economy. This resurgence of confidence was facilitated by enhanced coordination with the Nigerian National Petroleum Company (NNPC) and targeted diaspora engagement strategies.
Furthermore, prudent investment management decisions contributed to boosting the bank’s reserves. This strong performance underscores the CBN’s determined focus on ensuring external sector stability, positioning Nigeria more favorably to meet its international financial obligations, stabilise the Naira, and bolster macroeconomic confidence.
The overall financial results also point to a marked improvement in the bank’s bottom-line performance. The CBN moved from a deficit position of N1.3 trillion in 2023 to a surplus of N165 billion in 2024. This turnaround is largely the result of stringent expenditure controls, gains derived from strategic investments made by the bank, and an increase in income from foreign exchange transactions.
According to a statement from the CBN, the enhanced performance in 2024 is not a matter of coincidence but rather the outcome of intentional and carefully crafted management strategies. The leadership of the bank has reinforced governance and accountability measures, instilled a culture of operational discipline, and pursued a balanced monetary policy stance designed to ensure both price and financial system stability. These collective reforms have repositioned the CBN as a credible and effective monetary authority. The financial results for 2024 stand as clear evidence of the bank’s unwavering commitment to supporting economic recovery, safeguarding financial stability, and building public trust.
