The naira has seen remarkable gains since the introduction of the Electronic Foreign Exchange Matching System (EFEMS) by the Central Bank of Nigeria (CBN), with the currency trading at N1,587.29/$1 in the official market and N1,640/$1 in the parallel market as of Thursday.

EFEMS operates through Bloomberg’s BMatch system, facilitating spot transactions between the naira and the U.S. dollar, with a minimum trade size of $100,000. It aims to bring greater transparency and accountability to FX transactions by integrating seamlessly with banks’ systems and generating consolidated trade statistics.

CBN Governor Olayemi Cardoso has called EFEMS a “pivotal reform,” describing it as a critical step toward market transparency and stability.

“The unification of the exchange rate is a pivotal reform, but it marks just the beginning,” he said at the recent Chartered Institute of Bankers of Nigeria (CIBN) annual dinner. “The electronic FX matching system enhances transparency, restores confidence, and is expected to attract new investments.”

The gains recorded since the launch of EFEMS have been impressive. The naira, which had stagnated at N1,745/$1 for over a month in the parallel market, began appreciating on Tuesday, trading at N1,720/$1 and further strengthened to N1,640/$1 by Thursday.

In the official market, rates have seen similar improvements, starting at N1,662.77/$1 on Monday and closing the week at N1,587.29/$1. Analysts attribute this progress to the platform’s ability to eliminate counterparty risks and ensure market discipline.

However, while the new platform has been hailed for its potential to bring transparency and efficiency to Nigeria’s volatile foreign exchange market, many remain skeptical about whether this improvement is sustainable.

This is because it’s not the first time the naira has strengthened on the back of a policy initiative from the CBN. Similar measures in the past have initially provided some relief but ultimately failed to halt the currency’s freefall. The backdrop of previous disappointments raises questions about whether EFEMS will achieve what its predecessors could not.

Market watchers recall past initiatives such as the Investor and Exporter (I&E) FX window introduced in 2017, which initially buoyed the naira but failed to withstand mounting pressure from structural weaknesses in Nigeria’s economy. The parallel market soon reverted to a cycle of volatility, undermining gains made at the official window.

Tilewa Adebajo, CEO of CFG Advisory, acknowledged the importance of EFEMS but warned against premature conclusions.

“The new foreign exchange matching system is a welcome development for price discovery to try and put some sophistication in our markets and remove discrepancies,” he told ThisDay. “However, it’s too early to attribute naira appreciation solely to EFEMS. Let’s see how it pans out.”

Similarly, Bismarck Rewane, CEO of the Financial Derivatives Company, earlier expressed concern about the inability of the CBN initiatives to boost the naira’s performance in the FX market.

“We anticipate a 10 percent appreciation which can take you to about N1,550/$1 in 2025,” Rewane said. “But nothing suggests or justifies a currency losing half its value without major external shocks such as an earthquake, war, or natural disaster. The question remains what is responsible for this significant decline?”

Other Experts Weigh In

Sam Chidoka, Managing Director of Anchoria Advisory Services, highlighted the transparency EFEMS brings to the market in an interview with ThisDay.

“This system introduces some sort of market-making into the FX market,” Chidoka said. “When you have that, then the result is more market-driven pricing. It’s a step in the right direction.”

“What EFEMS has done is that it automatically is redefining the market. It’s a way of sanitizing the FX market. All the major players, including the Bureau De BDC guys, who are serious and know what they’re doing, can participate in this market. It’s also about digitizing the system. Prices will be transparent,” said Ayokunle Olubunmi, Head of Financial Institutions Ratings at Agusto & Co.

Concerns Over Sustainability

However, concerns persist about the sustainability of these gains, particularly in light of Nigeria’s underlying economic challenges. Limited FX supply, over-reliance on oil revenues, and a high import bill continue to exert pressure on the naira.

However, Cardoso remains optimistic about EFEMS’ potential to transform Nigeria’s FX market.

“The introduction of the electronic matching system will correct distortions by enhancing the price discovery process,” he said. “Additionally, it will significantly boost the central bank’s oversight and intervention capabilities, ensuring a more stable and transparent foreign exchange market.”

For EFEMS to succeed where other initiatives have faltered, economists said the CBN must pair its reforms with broader structural adjustments to the economy. Without addressing the root causes of naira volatility, they note that EFEMS risks becoming another chapter in Nigeria’s long list of short-lived currency reforms.

To stimulate the Nigerian economy and support local industries, the Nigerian Consumer Credit Corporation (CrediCorp) and the National Automotive Design and Development Council (NADDC) have unveiled an N20 billion consumer credit fund.

The initiative, announced in Abuja on Thursday, is designed to enable Nigerians to purchase locally-assembled vehicles through accessible credit schemes.

This development marks a significant step toward achieving industrialization in Nigeria—a goal long advocated by experts and stakeholders.

Uzoma Nwagba, Managing Director/CEO of CrediCorp, emphasized the transformative potential of credit in fostering industrial growth.

“The fund that we are launching today is just a start. It’s a start to show a commitment to this industry; it’s a start to show the commitment of the President, and it’s a start to catalyze credits and allow people to access and get out of transport poverty,” he said.

A Foundation for Growth

The initiative aims to boost production, meet financing demand within Nigeria’s automotive industry, and strengthen the country’s industrial base.

Credit schemes of this nature have historically played a pivotal role in the industrialization of developed nations, including the United States, where similar programs have been instrumental in fostering innovation, supporting businesses, and driving economic growth.

Access to credit is widely recognized as a cornerstone of industrial development. In developed economies, governments have long used credit initiatives to promote industries and enhance productivity. The U.S., for example, has consistently employed credit schemes to support businesses. The Small Business Administration (SBA) provides loan guarantees to small businesses, enabling them to access financing for growth. Similarly, during the Great Depression, the U.S. government introduced initiatives like the Reconstruction Finance Corporation to provide loans to industries, boosting production and employment.

The U.S. continues to use credit schemes to enhance productivity, with programs such as farm credit systems and incentives for renewable energy companies serving as modern examples.

Such initiatives have helped stabilize economies, drive technological advancements, and create jobs—outcomes Nigeria seeks to replicate with the newly unveiled scheme.

The N20 billion fund, though modest in scale, represents a pilot phase intended to test the program’s feasibility. According to Nwagba, the focus is not on the initial sum but on the program’s ability to demonstrate measurable impact.

“A big bet here is that we will have an opportunity to test this and catalyze it. Don’t worry about the headline number of N20 billion because that’s not actually a lot of money. If this test works, if we are able to enable people to get vehicles and track the impact on industries and jobs, it will create the confidence for more money to come in,” he said.

The initiative also aligns with Project S.C.A.L.E (Securing Consumer Access for Local Enterprises), launched by CrediCorp in November, which channels consumer credit to locally manufactured goods and services.

The Director General of NADDC, Dr. Joseph Osanipin, highlighted the wide-ranging economic benefits of the credit scheme, explaining that it would boost not only the automotive sector but also ancillary industries.

“When you promote auto, you are promoting the steel industry, the plastic industry, and generating employment. You are also promoting the energy sector,” he said.

Osanipin stressed that credit accessibility is essential for vehicle ownership, a challenge many Nigerians face due to high upfront costs.

“Our people want to buy vehicles, but it’s very difficult nowadays to save enough for a new one. When you access credit, you can buy the vehicle, use it for your job, and repay as you earn,” he noted.

A Lesson from Global Models

The scheme reflects lessons learned from industrialized nations, where similar schemes have empowered consumers and businesses. In countries like Germany and Japan, credit initiatives have been integral to rebuilding industries post-war. The Marshall Plan, for instance, provided loans to European countries after World War II, leading to rapid industrialization and economic recovery.

President of the Nigerian Automotive Manufacturers Association (NAMA), Bawo Omagbitse, lauded the initiative as a lifeline for an industry under significant strain.

“The auto industry itself requires transformation because it is currently suffocating. This scheme is a catalyst for great things to come,” he said.

Manufacturers are expected to align their production with consumer needs, ensuring that the vehicles offered under the scheme meet quality standards and preferences.

“If consumers are not happy with the products, they will not accept credit for those products,” Osanipin explained.

While the initiative is commendable, concerns remain about its sustainability and the broader economic environment. Past credit-based programs in Nigeria have often been hampered by inefficiencies, low consumer confidence, and corruption. Experts stress the need for robust implementation mechanisms and transparency to ensure the scheme achieves its goals.

However, Nwagba remains optimistic, viewing the program as a stepping stone toward greater economic empowerment.

“This is about enabling Nigerians with credit to own new automobiles, while also growing Nigeria’s automotive industry. We want to catalyze credit in this sector and help consumers out of transport poverty,” he said.

The success of the program is expected to set the stage for similar initiatives across other industries, laying the groundwork for Nigeria’s long-awaited industrial transformation.