Ugo Obi-Chukwu, the CEO of Naijaonpoint, says a shift by the Central Bank of Nigeria (CBN) to orthodox monetary policy has restored investors’ confidence.
Speaking on TVC News on Monday, Obi-Chukwu emphasized that orthodox policy requires interest rates to remain above inflation to attract foreign capital.
“When this central bank came about two years ago, one of the first things they said was they were going to adopt orthodox monetary policy,” Obi-Chukwu explained. “They weren’t going to do monetary policy the way the former central bank did; it was heterodox then.”
“Foreign investors were pulling out because inflation was rising and interest rates were low. So why would they bring their money here?” he asked. “You go back to orthodox policy, which means your interest rate has to be higher than your inflation rate, or at least tracking it.”
This shift, he noted, has led to increased foreign exchange inflows and a more stable FX environment.
“Today, we’re seeing $142 billion in reserves. Some call it hot money, but hot money needs to come first before it paves the way for cooler money.”
Obi-Chukwu also addressed the recent interest rate cut by the CBN, describing it as a response to easing inflation.
“At the macro level, inflation numbers are trending down. So the central bank is responding to that slowdown,” he said. “That’s why we’ve seen a 50 basis point cut. Some even expect a 100 basis point cut at the next meeting.”
He placed Nigeria’s monetary easing within a broader global context. “It’s not only happening in Nigeria. The U.S. has cut rates. The EU has cut rates. The U.K. has cut rates. We’re now gradually moving from hawkish monetary policy to one focused on engineering growth,” he added.
The shift, he said, reflects a global trend where central banks are pivoting from inflation control to stimulating economic expansion.
Turning to the banking sector, Obi-Chukwu praised Zenith Bank’s interim dividend payout of N1.25 per share, with a post-tax profit of N532.2 billion.
“For some of us shareholders, it was a pleasant surprise,” he said. “A few months ago, we were worried banks might not pay dividends due to provisioning requirements from the central bank.”
He noted that the ability to meet regulatory obligations and still reward shareholders signals strength.
“You’ve been able to bite the bullet and still pay dividends. That suggests resilience, especially in the environment we find ourselves in,” he said.
Obi-Chukwu added that Zenith is among the 14 banks that have already met the CBN’s recapitalization threshold, reinforcing investor confidence.
Obi-Chukwu highlighted the recapitalization drive as a strategic move to redirect liquidity into productive sectors.
Obi-Chukwu highlighted the recapitalization drive as a strategic move to redirect liquidity into productive sectors.
“Banks are coming off strong profits, boosted by exchange rate gains and high interest rates. They’re in a sweet spot for investors,” he said. “The fact that they’ve mopped up over N4 trillion shows how much cash is in the system.”
Referencing CBN money supply data, he noted that Nigeria has over N510 trillion in circulation. “There’s so much money to mop up, and this fits into the CBN’s strategy of moving funds from non-productive to productive areas,” he explained.
Looking ahead, Obi-Chukwu expects increased lending activity. “Manufacturers are saying, ‘We’ve endured interest rates at 35%. You’ve mopped up all this cash. You’d better start lending to us now.”