Nigeria’s FATF Exit Averts $30 Billion Investment Drain, CBN Governor Announces
The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has revealed that the country’s recent removal from the Financial Action Task Force (FATF) grey list prevented a potential loss of over $30 billion in investments, marking a pivotal moment for the nation’s economic stability.
A Costly Listing and a Critical Reprieve
Speaking at the annual Bankers’ Dinner in Lagos, Governor Cardoso detailed the severe economic implications of the grey-listing. He cited data indicating that countries on the FATF grey list typically suffer a 7.6% drop in GDP from reduced capital inflows in the first year alone.
“For Nigeria, that translates to more than USD 30 billion in potential investment,” Cardoso stated. “Exiting the list, therefore, signals a major restoration of confidence and eases compliance frictions for correspondent banks.” He described the delisting as one of the most significant achievements for the country this year.
The Road to Reform: How Nigeria Addressed FATF’s Concerns
The exit from the grey list was not a stroke of luck but the result of a coordinated nationwide effort led by the Federal Government with significant contributions from the CBN. To address the deficiencies highlighted by the global watchdog, Nigeria implemented a sweeping set of reforms.
These institutional enhancements included:
- Strengthened supervision of financial institutions.
- Improved quality and consistency of reporting for suspicious and cross-border transactions.
- Deepened intelligence-sharing among relevant agencies.
Crucially, the deployment of modern governance tools like the Electronic Financial Evaluation Monitoring System (EFEMS) and the Foreign Exchange (FX) Code played a central role in tightening oversight and ensuring greater transparency across the financial system.
Broader Economic Implications and Market Response
The FATF’s decision in October to remove Nigeria, alongside South Africa, Burkina Faso, and Mozambique, effectively ends a nearly three-year period where the country was tagged as a destination for illicit financial flows. This stigma had created significant headwinds for foreign investment.
The positive effects are already being felt. Following the delisting, the Naira showed signs of stabilization and hit a 10-month high against the US dollar, a direct boost to investor confidence. President Bola Tinubu has hailed the development as a “reform milestone,” underscoring the country’s commitment to global financial transparency.
What This Means for Nigeria’s Financial Future
Beyond the immediate avoidance of a massive capital flight, Nigeria’s exit from the grey list serves as a powerful signal to the international community. It demonstrates a tangible commitment to cleaning up the financial system, which is a foundational requirement for attracting stable, long-term investment.
The restoration of confidence reduces the “compliance premium” that international banks had to apply when dealing with Nigerian counterparts, making transactions smoother and less costly. This paves the way for a more integrated and resilient Nigerian economy within the global financial landscape.
Primary Source: Nairametrics