The Central Bank of Nigeria's (CBN) role in developing the capital market (equity and fixed-income markets) can’t be overstated.

Key takeaways:

  1. As the Central Bank of Nigeria (CBN) attempts to use monetary policy tools to carry out its mandates, there are key implications for the capital market.

  2. A lack of investors’ confidence in the CBN has impacted the effectiveness of its policies, leaving the Nigerian equity market (NGX) and banking sector to suffer for it.

  3. These policies will negatively impact the NGX and banking sector until this confidence is restored.


​​​​​In its recently updated mission statement, the CBN aims to be a “people-focused Central Bank promoting confidence in the economy and enabling an improved standard of living”.

You see, in this world, confidence is everything. And so, when we read the key phrase in that statement promising to  “promote confidence”, you can’t help but wonder about the performance of CBN’s core mandate: low inflation and a stable exchange rate. We all know that it is only when the CBN fully grasps its mandate that investors can have confidence in the economy and are happy to bring in their funds.

A classic example is the Nigerian stock exchange’s (NGX) performance in 2017. 

Following the 2014/15 global oil price crash and accompanying dollar shortage which eventually led to a recession, the CBN established the Investors & Exporters (I&E) window in April 2017 to stimulate dollar inflows. 

As foreign investors (who had previously exited due to the oil price crash) trooped back in their numbers, the NGX appreciated 42% in 2017—emerging as the third-best performing market globally.